Act 32 becomes effective statewide on January 1, 2012. Act 32 focuses on areas to improve the local income tax system including the consolidation of the tax collection process into county-wide tax collection districts, reducing the number of collectors from 560 to no more than 69, with Allegheny County divided into four separate tax collection districts.
Under Act 32, earned income is compensation defined under the PA PIT law with few exceptions dealing with farmers and clergy housing allowances. Active duty military compensation received for service in Pennsylvania in now taxable.
Under the Act, net losses from the operation of one business may be used by a taxpayer to offset net profits from another business, but cannot be used to offset earned income.
Philadelphia is governed under special tax laws and is not regulated by Act 32.