Who is paying earned income tax in Bucks County? Langhorne and Morrisville join other towns, districts

Most Bucks County municipalities are supplementing their budgets with the help of revenue collected from an earned income tax. And residents in some towns are feeling the hit twice as they are paying both their towns and school district.

Langhorne and Morrisiville are the latest to enact the tax. Morrisville's new tax was enacted in February and went into effect July 1 and Langhorne's will be charged as of Jan. 1, 2023.

The only Bucks municipalities now without the tax are the boroughs of Bristol, Langhorne Manor, Tullytown and Yardley and the townships of Falls and Lower Makefield, according to data provided by the Pennsylvania Department of Community and Economic Development.

There also are six school districts that have not charged the tax: Bensalem, Bristol Borough, Bristol Township, Morrisville, Neshaminy and Pennsbury.

When the earned income tax for the municipality and the schools are combined, only residents of Bristol Borough, Falls, Langhorne Manor, Lower Makefield, Tullytown and Yardley are not paying an earned income tax to either, though some residents may be paying the tax where they work, if a municipality and/or school district tax is charged there.

Langhorne looks to boost revenue through EIT

Langhorne Council adopted the tax Oct. 12, citing the borough's need to increase its $482,000 budget to hire a borough manager and to expand its part-time public works department. And the town that dates to early Colonial times also needs public improvements including storm sewer lines and road repairs that it cannot now afford without a tax increase, officials said.

More:Newtown Township loses as other municipalities enact EITs

"We don't have a manager. This isn't what we signed up for as elected officials — taking the trash out. We're still almost over our budget and its only October ... We want to have a borough that works," said Council President Paul Murdoch.

Councilwoman Nancy Culleton pointed out that Newtown Borough with only about 335 more residents than Langhorne's 1,616, according to Census Reporter, has an annual budget of more than $3 million.

And Councilwoman Kathleen Horwatt said that seniors on fixed incomes cannot afford an increase in real estate taxes, so she too thought the earned income tax was the way to generate more revenue.

Who has to pay earned income tax?

Pennsylvania's Local Tax Enabling Act allows municipalities and school districts to charge an earned income tax to residents or those who work in the municipality. If a person works in a municipality that charges an earned income tax but also lives in one that charges it, he or she only has to pay the tax to where they live.

So Langhorne, for instance, will receive the $114,000 that residents who work in other municipalities are currently paying to them because Langhorne didn't have the tax. But due to provisions of the Sterling Act that affects Philadelphia's wage tax, those who work in and pay the city won't have to pay the income tax in Langhorne.

"Those residents that currently pay the Philadelphia wage tax, will not be double taxed," Murdock said. "They will continue to pay in Philadelphia and not have to pay any additional EIT to Langhorne Borough."

There are some exceptions but in general the taxes of the municipality and school district "are limited to a combined rate of one percent."

Where both a school district and a municipality located within that school district both levy an EIT, the one percent limit must be shared on a 50/50 basis, unless otherwise agreed to by the taxing bodies, according to the state Department of Community and Economic Development.

Murdock said that Langhorne currently can collect the total 1% but it may have to be shared if the Neshaminy School District decides to enact an EIT.

Exceptions can increase tax for residents

However, there are exceptions to this rule and some municipalities and school districts are now charging more than a combined 1 percent because they meet certain criteria, said Michele Halpern of the Keystone Collections Group which collects the tax in Bucks County for the municipalities and school districts.

For example, residents of East Rockhill are now paying 0.75% to the township and 1% to the Pennridge School District.

Halpern said there were several reasons for which municipalities or school districts could charge a higher tax, including for distressed municipalities or those that have distressed pension funds, for open space and for other reasons listed in state statutes.

When Morrisville enacted the tax in February, some residents questioned whether it would help the town but Councilwoman Nancy Sherlock said the borough of more than 8,500 residents needed it to help balance its $7.77 million total budget and for specific infrastructure repairs to the borough hall.

In Bristol Borough, Council President Ralph DiGuiseppe said the municipality has considered enacting the tax but so far is staying the course of not using it.

"We try to watch our spending ... People appreciated that the borough doesn't have any earned income tax," he said.

This article originally appeared on Bucks County Courier Times: Langhorne, Morrisville adopt earned income taxes to help fund budgets