1Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
2act relating to tax reform and State taxation by codifying
3and enumerating certain subjects of taxation and imposing
4taxes thereon; providing procedures for the payment,
5collection, administration and enforcement thereof; providing
6for tax credits in certain cases; conferring powers and
7imposing duties upon the Department of Revenue, certain
8employers, fiduciaries, individuals, persons, corporations
9and other entities; prescribing crimes, offenses and
10penalties," in personal income tax, further providing for
11taxability of estates, trusts and their beneficiaries.

12The General Assembly of the Commonwealth of Pennsylvania
13hereby enacts as follows:

14Section 1. Section 305 of the act of March 4, 1971 (P.L.6, 
15No.2), known as the Tax Reform Code of 1971, added August 31, 
161971 (P.L.362, No.93), is amended to read:

17Section 305. Taxability of Estates, Trusts and Their
18Beneficiaries.--(a) Except as set forth in subsection (b), the 
19following apply:

20(1) The income of a beneficiary of an estate or trust in
21respect of such estate or trust shall consist of that part of

1the income or gains received by the estate or trust for its
2taxable year ending within or with the beneficiary's taxable
3year which, under the governing instrument and applicable State
4law, is required to be distributed currently or is in fact paid
5or credited to said beneficiary.

6(2) The income or gains of the estate or trust, if any,
7taxable to such estate or trust shall consist of the income or
8gains received by it which has not been distributed or credited
9to its beneficiaries.

10(b) The first three thousand dollars ($3,000) of income from
11a qualified disability trust shall not be income or gains under
12subsection (a).

13(c) As used in this section, the following words and phrases
14shall have the meanings given to them in this subsection:

15"Disabled." As defined in section 1614(a)(3) of the Social 
16Security Act (49 Stat. 620, 42 U.S.C. § 1382c(a)(3)).

17"Qualified disability trust." A trust described in section 
181917(c)(2)(B)(iv) of the Social Security Act (49 Stat. 620, 42 
19U.S.C. § 1396p(c)(2)(B)(iv)) which complies with all of the 
20following:

21(1) The trust is established solely for the benefit of
22individuals who are:

23(i) under 65 years of age; and

24(ii) disabled.

25(2) All of the beneficiaries of the trust are determined by
26the Commissioner of Social Security to have been disabled for
27some part of the tax year. A trust shall not fail to comply with
28this clause solely because the body of the trust may, after the
29trust ceases to have any disabled beneficiary, revert to a
30person that is not disabled.

1Section 2. The amendment of section 305 of the act shall
2apply to taxable years beginning after December 31, 2013.

3Section 3. This act shall take effect in 60 days.