Largest Cash Impact Expected on Earned Income Taxes
income tax revenue, the second largest local government tax source in Pennsylvania, is expected to be hit the hardest by the pandemic because it is tied to jobs.
The impact is likely to be felt the most in August, when municipalities receive EIT payments from April, May and June.
The impact will be uneven. Second class townships receive the most on average from EIT - over 46 percent of total tax revenue compared with approximately 30 percent for cities and boroughs. Home rule communities with higher EIT rates are also anticipated to suffer disproportionately.
Another factor to consider: a municipality's residential mix is important to EIT revenue since certain industries like restaurants and retail have shed jobs while others are able to work from home.
Other taxes likely to be effected are real estate transfer taxes and local services taxes, depending on local business closings within a municipality.