About the Pennsylvania Homeowner Tax Relief Act

Pennsylvania's Homeowner Tax Relief Act lowers taxes for certain property owners.

The Pennsylvania Homeowner Tax Relief Act, or Act 72, uses a mix of tax money and gaming revenue to reduce property tax bills.

Beneficiaries

Act 72 was designed to benefit only homeowners and farmers, rather than all property owners. School districts can take advantage of provisions of Act 72, but certain requirements apply.

Specifics

Act 72 utilizes Homestead and Farmstead Exclusions to offer property tax reductions. Because homeowners and farmers are intentionally targeted, they are not forced to pay for business tax subsidies with higher income taxes.

Homestead Exclusion

The Homestead Exclusion offers tax relief to those whose dwelling is a permanent residence. The assessed home value is reduced, thus lowering the property taxes. This exemption does not apply to rental units, vacation homes, camps or second homes.

Farmstead Exclusion

The Farmstead Exclusion offers lower property taxes on farm buildings when at least one farmer lives on the property. The farm's value is reduced, resulting in lower property taxes. The farm home is not included, as it receives tax relief under the Homestead Exemption.

School Districts

School districts are not required to participate in Act 72 but can choose whether or not to accept its provisions. School districts must make a "qualifying contribution" by raising their local income taxes by 0.01 percent. Act 72 is a tax and revenue shift, not a tax reduction, to ensure that districts have the same amount of operating revenue.

References

• Penn State: Understanding the Homeowner Tax Relief Act