Bill to Exempt Federal Stimulus Payments from State and Local Taxation Clears Committee

The Pennsylvania House of Representatives’ version of legislation sponsored in the Senate by Sen. Jim Brewster to exempt federal coronavirus stimulus funds from state and local taxation cleared the state Senate Finance Committee today.

Brewster and the sponsor of the House bill, Rep. Brandon Markosek, worked together and introduced companion measures in the Senate and House.

“The last thing that men and women who received federal stimulus payments should face in this very difficult time is an added tax liability,” Brewster said.  “The legislation would exempt federal CARES Act payments from state and local taxes.”

House Bill 2408 was approved by the Senate Finance Committee unanimously.  Brewster introduced the Senate version of the plan as Senate Bill 1104.

“COVID-19 has been harsh for all residents in one form or another. Unfortunately, many struggled financially due to a sudden loss of income, which is why the CARES Act was passed. This funding was exempt from federal taxation with hopes that it would maximize the impact of the distributed funding. This bill does the same exact thing at the state level,” Markosek said.

The federal payments include funds for individuals making up to $75,000 per year ($150,000 married) to receive a $1,200 check plus $500 per child.  Stimulus checks will be reduced then phased-out for individuals making up to $99,000 for individuals ($198,000 married).

“As I indicated when I originally introduced the Senate version of the tax exemption, we need to ensure that men and women have financial resources available to bridge fiscal gaps as we promote a swift economic recovery from the COVID-19 pandemic,” Brewster said.  “We do not need to provide federal financial help now then ask for some of it back in the form of taxes later.

“Stimulus funds should not be subject to state or local taxation, period.”

The measure must still clear the Senate Appropriations Committee and be voted on by the full Senate.

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