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Council hears trade-offs of a $12,000 earned-income-tax exemption; staff warns refunds and nonresident collections reduce in‑city benefit
Summary
Finance staff told council that a city EIT exemption at the $12,000 state ceiling could reduce city revenue by an estimated $258,000 if more taxpayers file, but nonresident collections and processing fees mean only about 46% of that amount would reach city residents.
The Lancaster City finance committee on Nov. 3 revisited a staff report on a possible earned income tax (EIT) exemption for low-income residents and focused discussion on who would benefit and how much of the forgone revenue would actually reach city residents.
Director of Finance Tina Campbell told the committee the legal ceiling for a municipal earned income tax exemption is $12,000 under Pennsylvania practice and that the city currently has no EIT exemption. She said implementation would require the Lancaster County Tax Collection Bureau to process refunds because the work requires confidential tax information.
Using 2024 actuals and 2025 projections, staff estimated that if only current filers…
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