Local Tax Enabling Act (LTEA)

Municipalities and school districts only have taxing powers that are granted to them by the State of Pennsylvania. The Local Tax Enabling Act of December 31, 1965 is the enabling legislation of the State that permits Pennsylvania municipalities and school districts (except for the City and School District of Philadelphia and the School District of Pittsburgh) to levy an earned income and net profit tax (commonly referred to as the "EIT") and many other local taxes as well. As this Act's name implies, it only "enables" the municipalities and school districts to adopt a tax. If they choose to do so, they must follow certain requirements, of which the most important is passing an ordinance or resolution to levy the tax. While the LTEA is not the only statutory source of local taxing power, it is presented here since it is the predominant source for taxes administered by the Capital Tax Collection Bureau.

For the EIT, the Local Tax Enabling Act is the beginning of the hierarchy for laws and/or rules to follow. A list of this hierarchy, from top to bottom and from very formal to informal is presented below.

1. LTEA
2. Municipality's or School District's EIT Ordinance/Resolution
3. Municipality's or School District's formally adopted EIT Regulations
4. Form instructions
5. Other written or unwritten policies

Click here to view the LTEA in HTML format

Click here to view the LTEA in PDF format. The full-text version presented here is an excerpt from the Pennsylvania Department of Community Affairs' (now merged into the Department of Community & Economic Development - Center For Local Government Services) publication entitled, the Taxation Manual (6th Edition, 1993). Read the information below regarding PDF formatted documents if this is the first time you're using this format. This file is about 2 megabytes in size, so it will take a while to download.

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