Almost every school district is required by state law to place a question on the ballot in the May primary election asking voters whether they favor increasing their school district’s earned-income tax rate or levying a new personal income tax in exchange for lower property taxes.
All registered voters, regardless of party affiliation, are eligible to vote on the referendum question in the school district in which they reside.
An earned-income tax is levied on wages and salaries only. A personal income tax would be based on all income, such as interest and dividends. Social Security and pensions would not be subject to either tax.
All Centre County school boards opted to allow voters the opportunity to choose a higher earned-income tax rate, rejecting the idea of establishing a new personal income tax.
The real estate tax reduction would apply to residential homeowners. Each homeowner in the district would get the same dollar amount real estate tax reduction, regardless of property value. A farmstead property used as the residence of the owner would be eligible for both a homestead and a farmstead exemption.
If voters approve the change, there would be one real estate tax reduction per household, but everyone in the household who has earned income would be subject to the increased earned-income tax.
If an increased earned-income tax is approved, homeowners with little or no earned income, especially senior citizens, would benefit.
Renters would pay higher earned-income taxes but would not benefit from a reduction in the real estate tax. Commercial property owners, including landlords, are not eligible for reduced real estate taxes under Act 1.
Only homeowners who have filed a homestead exemption form and live at the property will realize a savings in property tax in the first year. Homeowners will have the opportunity each year to file homestead exemptions for the next year.
Here’s a look at the referendum questions that will be posed in each district, and a guide to determining how you would be affected if the change is approved by voters.
From CDT staff reports