Neshaminy School District Business Administrator Donald Irwin recommended that the district take steps to levy an earned income tax at the Wednesday, March 29 Business Operations Committee meeting.
Irwin commented near the end of the meeting of the committee, made up of school board President Tina Hollenbach and board members John Allen, Cyndie Bowman and Marty Sullivan. Hollenbach, Allen and Bowman were present but Sullivan was unable to attend the meeting.
During a brief discussion of a possible EIT, Irwin said the earned income tax, if levied, would be “revenue neutral,” meaning it would be accompanied by offsets in other taxes. The main one would be an increase in the homestead exemption resulting in reduced property tax bills.
An EIT would be advantageous for retired property owners because retirement income is not subject to the tax and it also would alleviate some of their property tax burden, Irwin said. He added it probably makes sense for the district to start relying more on an EIT and less on property taxes because wages figure to grow at a higher rate than real estate assessments.
“I think it would be the right thing for the school district in the long run,” Irwin said. “To me, it’s a no-brainer.”
Hollenbach, Bowman and Allen offered no opinion on an EIT during the meeting. Approached after the meeting, Hollenbach said she needs more information in order to form a definitive opinion one way or the other.
“It could help in the long run and it should be explored more,” she said. “I need more information.”
Irwin explained that the process for a Pennsylvania school district to levy an earned income tax includes forming a tax study commission that would do an extensive study, and then having the school board vote on whether or not to place the question on a voter referendum, where the district’s electorate would have final say.
According to his estimated timeline, the earliest the issue would be on the ballot would be the general election in November 2025, meaning that if an EIT is approved by Neshaminy voters that day, it wouldn’t take effect until the start of the 2026-27 school year on July 1, 2026.
Several Bucks County school districts, including the two largest — Central Bucks and Council Rock — have earned income taxes and most county municipalities have an EIT. Four of the six municipalities that make up Neshaminy — Lower Southampton Township and Hulmeville, Penndel and Langhorne boroughs — already have a 1 percent earned income tax. If Neshaminy levies one, it would start taking half of the EIT in those municipalities.
Middletown Township, by far the largest municipality in the school district, has a 0.5 percent earned income tax. If an EIT is approved in Neshaminy, Middletown residents would continue paying 0.5 percent to the township and start paying 0.5 percent to the school district.
Langhorne Manor Borough is the only Neshaminy municipality without an EIT. Irwin was unsure at the March 29 meeting whether Langhorne Manor wage earners would pay the full 1 percent or 0.5 percent to Neshaminy if the district enacts the tax.
Unlike municipalities, which can charge an earned income tax to both people who work and live there, Pennsylvania school districts cannot levy an EIT on non-residents, according to information from the Local Government Commission of the Pennsylvania General Assembly. Municipalities also do not need to go to voter referendum to enact an earned income tax, unless they intend to exceed the normal maximum rate of 1 percent.
Residents who work in Philadelphia and pay that city’s wage tax would be among those exempt from paying an earned income tax to their home municipality or school district.
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