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Committee schedules vote on bill to exempt volunteer length-of-service awards from state income tax
Summary
Representatives and a Lower Paxton Township official described a bill (House Bill 1306) to exempt Length of Service Award Programs (LOSAP) payments to volunteer firefighters from Pennsylvania personal income tax; committee agreed to schedule a vote next week and asked sponsors to work on guardrails and possible caps.
Committee members scheduled a vote next week on House Bill 1306 after lawmakers and a municipal finance official argued the measure would help recruit and retain volunteer firefighters.
"It—s not a secret that volunteer organizations throughout the Commonwealth, especially volunteer fire companies, are facing recruiting and retention issues," Representative Kerwin said while introducing the bill with Representative Fleming. Kerwin told the committee exempting LOSAP payments from income tax would "incentivize volunteer service and reward those who have served and protected our community on a volunteer basis."
Lower Paxton Township Assistant Township Manager and finance director Sam Miller described his municipality—s program and the ambiguity that prompted the bill: "For the township itself, we provide a benefit of $10 per month per year of service up to a maximum of $250. So the maximum any individual receive under this program is $3,000 and equivalent of about $93 in PA tax." Miller told the committee the IRS provides no definitive guidance on reporting these awards and that different trustees and accountants have reported them in varying ways.
Why it matters: Representatives and the municipal official said LOSAP programs are widely used by volunteer fire companies and that clarifying their tax treatment would remove administrative confusion and better recognize volunteer service. Committee members repeatedly said they support the concept but asked for guardrails to prevent abuse, such as caps or minimum-age requirements. Representative Mike Jones and others recommended amendments to limit the size or structure of benefits to avoid creating a de facto paid position.
Next steps and scheduling: Chair Griner said the committee would schedule House Bill 1306 for a vote on Wednesday, May 14, at 10 a.m., with an amendment deadline of 1 p.m. on May 13. Sponsors and the chair agreed to work on one or two amendments before the floor vote.
