61 Pa. Code § 121.9 - Taxable income

(a) The tax imposed under the act of August 31, 1971 (P. L. 362, No. 93) (72 P. S. §§ 7201-8101) applies to income received or accrued to a taxpayer on or after June 1, 1971. Taxpayers who file on a fiscal year basis shall be subject to the tax for the first taxable period on that portion of the fiscal year which postdates May 31, 1971.

(b) The tax is levied at the flat rate of 2.3 % on eight classes of income defined as follows:

(1) Compensation. All salaries, wages, commissions, bonuses and incentive payments whether based on profits or otherwise, fees, tips, and similar remuneration received for services rendered whether directly or through an agent and whether in cash or in property.

(2) Net profits. The net income from the operation of a business, profession, or other activity after provision for all costs and expenses incurred in the conduct thereof, determined either on a cash or accrual basis in accordance with accepted accounting principles and practices but without deduction of taxes based on income.

(3) Net gains or income from disposition of property. Net gains or net income, less net losses, derived from the sale, exchange or other disposition of property, including real or personal, whether tangible or intangible. The term net gains or income shall not include gains or income derived from obligations which are statutorily free from State or local taxation under any other act of the General Assembly of this Commonwealth or under the laws of the United States.

(4) Other. Net gains or income derived from or in the form of rents, royalties, patents and copyrights.

(5) Dividends. Any distribution in cash or property made by a corporation, association, or business trust paid out of the following:

(i) Accumulated earnings and profits.

(ii) Earnings and profits of the year in which such dividend is paid.

(6) Interest. Interest derived from obligations which are not statutorily free from state or local taxation under any other act of the General Assembly of this Commonwealth or under the laws of the United States.

(7) Gambling and lottery winnings. All gambling and lottery winnings.

(8) Estates or trusts. Net gains or income derived through estates or trusts.

(c) The act does not provide for any adjustment to the tax base for personal exemptions or deductions.

Notes

61 Pa. Code § 121.9