An Act amending the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, in personal income tax, providing for exemption from tax for early withdrawals from certain accounts.

2025-2026 Regular Session Introduced by Ryan Bizzarro and 13 co-sponsors

The bill creates a Pennsylvania personal income tax exemption for certain early withdrawals from designated accounts.

Summary of HB 2511 (Session 2025-2026, Pennsylvania)

Purpose and intent

The bill amends the Pennsylvania Tax Reform Code of 1971 (Act 1 of 1971) to create an exemption from personal income tax for certain early withdrawals from designated accounts.

The core aim is to offer tax relief by temporarily exempting early withdrawals from tax liability, presumably to encourage or accommodate access to funds from specific accounts under defined conditions.

Key provisions and changes

Amends the Personal Income Tax provisions within the Tax Reform Code of 1971.

Establishes an exemption from Pennsylvania personal income tax for early withdrawals from qualifying accounts. The exact scope, criteria, and administrative rules for what constitutes a qualifying account and what constitutes an “early withdrawal” are defined within the bill (the summary here references “certain accounts” and “early withdrawals,” with details to be specified in the statutory text).

The bill may specify:

Which accounts are eligible (e.g., retirement, education, health-savings-like accounts, or other designated accounts).
The definition of “early withdrawal” (e.g., withdrawals before a specified age, or before meeting certain conditions).
Any limits on the exemption (e.g., applicability to a single withdrawal or cumulative exemptions up to a cap).
Timing and effective date for the exemption (upon enactment, or for tax years beginning after a certain date).
Administrative considerations (reporting requirements, interaction with other tax credits or penalties, conformity with federal rules).

Who/what is affected

Individual Pennsylvania residents who make withdrawals from qualifying accounts under the defined conditions.

Taxpayers who would otherwise owe Pennsylvania personal income tax on those withdrawals; the exemption removes or reduces that tax liability for eligible withdrawals.

Potential impact on state revenue, depending on the scope and frequency of qualifying withdrawals and the size of exempted amounts.

Procedural and timeline aspects

Sponsorship includes a broad list of co-sponsors, signaling cross-cutting interest across different districts.

The bill will move through the standard legislative process for Pennsylvania, including committee consideration, potential amendments, and floor votes.

Effective date and any retroactivity (e.g., tax year 2025 or 2026 onward) will be specified in the bill’s text.

Administrative implementation would require consistency with Pennsylvania Department of Revenue guidance and potential changes to filing instructions and forms.

Potential impact and considerations

Taxpayers with eligible early withdrawals could benefit from reduced state tax liability, improving liquidity for individuals accessing funds early from the designated accounts.

The revenue impact to Pennsylvania would depend on the number of qualifying withdrawals and their amounts; legislators may weigh fiscal effects against policy goals.

Implementation details will determine eligibility, compliance burden, and interaction with federal tax treatment of similar withdrawals.

If you’d like, I can tailor this summary to specific sections of the bill once the full text is available, and add concrete details such as eligible accounts, withdrawal criteria, and any sunset or renewal provisions.