Limitation on credit.

(b) Example of limitation on credit. A resident taxpayer earns $10,000 of wages in New York State on or after June 1, 1971. New York State permits him deductions after that date totaling $2,000, and he pays after that date a total tax of $500. In addition, he has intangible capital gains of $5,000. His total Commonwealth taxable income is $15,000 ($10,000 in wages and $5,000 in capital gains) and his total Commonwealth income tax liability is $330 (2.2% of $15,000). The credit of the taxpayer for New York income tax paid is limited to $220 (10,000/15,000 x 330). The deductions permitted in New York State have no effect upon the credit allowed in this Commonwealth. No credit will be permitted for tax withheld or paid to another state on income earned before June 1, 1971. In addition, no credit will be permitted for tax withheld or previously paid to another state which is subsequently determined an overpayment and which is then refunded. Source The provisions of this § 111.4 amended December 29, 1978, 8 Pa.B. 3825. Immediately preceding text appears at serial page (36040). Notes of Decisions Income Subject to Tax in Another Jurisdiction Where taxpayers filed both Delaware and Pennsylvania personal tax returns, the taxpayers’ entire Pennsylvania income was not subject to tax by Delaware, since the Delaware system, like those systems in other graduated income tax states, uses out-of-state income merely as a measure of the tax rate, rather than actually taxing that income. Peet v. Commonwealth , 705 A.2d 497 (Pa. Cmwlth. 1998); exceptions overruled, decision adhered to by 719 A.2d 828 (Pa. Cmwlth. 1998). Cross References This section cited in 61 Pa. Code § 105.5 (relating to special rules).