PA SB527

Amends The Local Tax Enabling Act to include cities of the first class (Philadelphia) and adds a new Chapter 6 establishing local taxing authority for Philadelphia, replacing the Sterling Act of 1932

Prohibits Philadelphia from imposing wage taxes on nonresident individuals who work entirely outside the city, even if their employer is located in Philadelphia; remote workers may only be taxed on compensation for work physically performed within city limits

Requires Philadelphia to reimburse school districts and municipalities of residence for Pennsylvania residents who are nonresidents of Philadelphia but pay the city wage tax, effective for tax years beginning after December 31, 2025

Employers must report quarterly to Philadelphia the amount of wage tax owed to each employee's home school district and municipality; Philadelphia must pay certified reimbursement amounts within 30 days

Takes effect 180 days after enactment or January 1, 2026, whichever is later; temporary regulations expire two years after publication