An EIT in T/E : What it Means for Locals who Commute

The Earned Income Tax or EIT that’s up for consideration would levy a 1 percent tax on all earned income.

“Under Act 511, that excludes inheritance, trust distributions, gambling winnings, lottery proceeds, capital gains, pensions and social security,” said Dave Davare, of the Pennsylvania School Board Association.

But for people who live in T/E but who commute to work in other jurisdictions, earned income taxes could already be coming out of their paychecks. Many municipalities already have them in effect, but because the T/E School District doesn’t, the tax money isn’t coming back to Easttown or Tredyffrin.

For those who work outside of the T/E District boundries, an EIT allows for that tax to be levied in whatever municipality they work, and redirected back to the home township. Without an EIT in place, there is no reciprocity between governments. So the money levied by other townships stays in those townships and is lost to T/E. If T/E imposes an EIT, that money would come back to the district.

The Rules are Different for Commuters who Work in Philadelphia

On the other hand, if a T/E resident works in Philadelphia, The Sterling Act allows Philadelphia to tax non-residents based on what they earn, while working within the city limits, Davare explained.

“Philadelphia is not required to turn that money over to the local taxing jurisdiction, like any other school district or municipality would be required to,” he said.

For those who work in Philadelphia part time and but out of suburban offices part time, it’s those suburban work day wages that would be subject to T/E’s EIT, not a combination of the two.

But for all other circumstances, once T/E levies an EIT, the other municipalities would have to remit the money, which would go to benefit the district, Tredyffrin, and Easttown townships.