---
name: pa-payroll
description: "Tier 2 Pennsylvania content skill for employer payroll compliance covering tax year 2025. Includes the 3.07% flat PIT, Local Earned Income Tax under Act 32 with employer withholding by employee-residence PSD code (rates 0.5-3.9%), Local Services Tax (typically $52/year), reciprocal agreements with NJ/OH/IN/MD/VA/WV that exempt non-resident employees from state withholding, Philadelphia and Pittsburgh wage taxes (separate from state PIT under Sterling Act), SUC wage base $10,000 with rates 1.4-9.1%, REV-419 state withholding form, the Construction Workplace Misclassification Act, and quarterly PA-501/UC-2 combined filings."
license: "AGPL-3.0-or-later (code) / OpenAccountants Guide License v1.0 (content)"
metadata:
  source: openaccountants
  openaccountants_url: "https://www.openaccountants.com/skills/pa-payroll"
  jurisdiction: "US-PA"
  tax_year: "2026"
  last_updated: "2026-10-16"
  authored_by: "Michael Cutajar and the OpenAccountants team"
  trust_label: "Built by Michael Cutajar and the OpenAccountants team"
  review_status: "pending_review"
---

# Pennsylvania employer payroll: PA withholding, local EIT (Act 32), LST, unemployment compensation, minimum wage and new hires (2026, with 2025 notes)

Figures are for tax year 2026 unless a line says 2025. Pennsylvania's withholding rate, the unemployment compensation (UC) wage base, the UC rate range, the new-employer UC rates and the employee UC rate are the same in 2025 and 2026 ([Employer Withholding](https://www.pa.gov/agencies/revenue/resources/tax-types-and-information/employer-withholding); [UC yearly tax highlights](https://www.pa.gov/agencies/dli/resources/for-employers-and-educators/how-to-file/uc-tax/yearly-tax-highlights)). A dated section near the end covers 2025 payrolls.

## Scope and who this is for

- **Covers:** employers with employees who live or work in Pennsylvania:
  - Pennsylvania personal income tax (PIT) withholding, Form REV-419 and the reciprocal states;
  - deposit frequencies, the quarterly withholding return, and W-2s with their transmittal (REV-1667);
  - local earned income tax (EIT) withholding under Act 32: PSD codes, the higher-of rule and the worksite tax collector;
  - the Local Services Tax (LST);
  - UC employer contributions and the employee contribution;
  - the state minimum wage and new hire reporting.
- **Summarised only, then referred:**
  - Philadelphia wage tax. Act 32 does not apply to Philadelphia; the employer withholds the City's own resident or nonresident rate and pays the City ([DCED FAQ](https://dced.pa.gov/local-government/local-income-tax-information/local-withholding-tax-faqs/)). This skill does not state Philadelphia's rates. Get them from the City of Philadelphia Department of Revenue.
  - Employer-side city taxes, such as Pittsburgh's payroll expense tax and Philadelphia's business taxes.
- **Does not cover:** federal payroll taxes; the employee's own PA-40 or local return; withholding on 1099 payments; worker classification (including the Construction Workplace Misclassification Act); final pay; overtime exemptions; workers' compensation.
- **Local rates change.** Municipalities and school districts set EIT and LST rates; the Department of Community and Economic Development (DCED) publishes them. Look up the current rate by address ([Local income tax information](https://dced.pa.gov/local-government/local-income-tax-information/)).

## Ask the client first

- Where does each employee live, and where do they physically work? Get full street addresses, including for home-based employees, whose homes are worksites for local tax.
- Does any employee live in Indiana, Maryland, New Jersey, Ohio, Virginia or West Virginia? Has that employee given you Form REV-419? Are you registered to withhold that state's tax?
- Does any employee claim Tax Forgiveness or military-spouse (SCRA) relief from withholding?
- Does any employee live or work in Philadelphia?
- Do any employees work partly outside Pennsylvania? On how many working days?
- How much PA tax do you expect to withhold each quarter and each year? What deposit frequency is on your myPATH account?
- Are you registered with the local tax collector for every worksite? Do you hold a Residency Certification Form for every employee?
- Has any employee filed an LST exemption certificate or a principal-employer statement?
- What is your 2026 UC rate on Form UC-657? Are you newly liable, and are you in construction?
- Do you take a tip credit for any employee?

## The method, step by step

1. **Register.** Get a federal EIN, then register for employer withholding and a UC account through the Pennsylvania Online Business Tax Registration at mypath.pa.gov. Wage withholding goes in an Employer Withholding account, separate from 1099 withholding accounts ([Employer Withholding](https://www.pa.gov/agencies/revenue/resources/tax-types-and-information/employer-withholding)). Register with the local tax collector for each Pennsylvania worksite to get a local tax ID ([DCED employer steps](https://dced.pa.gov/local-government/local-income-tax-information/instructions-employers/)).
2. **Report each new hire** to the Pennsylvania New Hire Reporting Program through PA CareerLink. This covers every employee who lives or works in Pennsylvania, including rehires and temporary agency placements ([Report newly hired employees](https://www.pa.gov/services/dli/report-newly-hired-employees)). Federal law sets the outer deadline: no later than 20 days after the hire date or, for electronic filers, two monthly transmissions 12 to 16 days apart ([42 U.S.C. 653a](https://www.law.cornell.edu/uscode/text/42/653a)).
3. **Collect forms at hire.**
   - Federal Form W-4. Pennsylvania has no allowance certificate because its rate is flat.
   - Form REV-419, only from an employee who claims nonwithholding (see step 5).
   - The Residency Certification Form for local EIT, filled in from DCED's address search and kept in the personnel file. The employee must also tell you of any later name or address change.
   - Any LST exemption certificate or principal-employer statement.
4. **Withhold PA tax at 3.07%** of PA compensation for each payroll period. For supplemental pay, add it to the current period's compensation and apply the same rate ([REV-415](https://www.pa.gov/content/dam/copapwp-pagov/en/revenue/documents/formsandpublications/formsforbusinesses/employerwithholding/documents/rev-415.pdf)).
   - **Residents:** withhold on all compensation, wherever the work is done, with two exceptions that depend on the other state:
     - Working entirely in another state: withhold on all of it, unless that state has an income tax and you are withholding that state's tax.
     - Working partly in another state that has an income tax, where you withhold that tax: withhold PA tax on the PA share, meaning PA working days divided by total working days, times total compensation. If the other state has no income tax, withhold PA tax on everything.
   - **Nonresidents:** withhold on pay for work done in Pennsylvania only, using the same working-day fraction. Withhold on all of it unless your records can show the PA share.
   - **Convenience of the employer:** in the working-day fraction, count as PA days any days a nonresident works outside Pennsylvania only for their own convenience. Only days worked elsewhere of necessity in the employer's service are non-PA days ([PIT Guide, gross compensation](https://www.pa.gov/agencies/revenue/forms-and-publications/pa-personal-income-tax-guide/gross-compensation)). If you require a nonresident to telework full-time from home in another state, the pay is not PA-source and you need not withhold ([telework guidance](https://www.pa.gov/agencies/revenue/resources/tax-law-policies-bulletins-notices/telework-guidance)).
   - **Commission salespeople** paid on volume: the PA share is PA sales volume divided by total sales volume.
5. **Apply REV-419 only where it fits** (see the REV-419 section below). Every other employee is withheld at the flat rate.
6. **Withhold local EIT.** Compare the employee's Total Resident EIT Rate (home) with the Work Location Non-Resident EIT Rate (worksite). Withhold the higher of the two and pay it to the worksite's tax collector ([DCED FAQ](https://dced.pa.gov/local-government/local-income-tax-information/local-withholding-tax-faqs/)). Philadelphia follows its own rules (see the boundaries table).
7. **Withhold the LST** for the worksite if it is listed on DCED's Official Tax Register.
8. **Withhold the employee UC contribution** of 0.07% on all gross wages, with no cap. Pay the employer contribution on the first $10,000 of each employee's wages for the calendar year ([UC yearly tax highlights](https://www.pa.gov/agencies/dli/resources/for-employers-and-educators/how-to-file/uc-tax/yearly-tax-highlights)).
9. **Deposit and file** on the schedules under "Filing and payment": PA deposits and quarterly returns, local and UC quarterly returns, and the year-end W-2, REV-1667 and W2-R.
10. **Check pay rates** against the $7.25 state minimum wage and the tip-credit rules ([Wage FAQs](https://www.pa.gov/agencies/dli/resources/compliance-laws-and-regulations/labor-management-relations/pennsylvania-s-minimum-wage-act/wage-faqs)).

## Figures for 2026 (and 2025 where they differ)

### PA personal income tax withholding ([Employer Withholding](https://www.pa.gov/agencies/revenue/resources/tax-types-and-information/employer-withholding); [REV-415](https://www.pa.gov/content/dam/copapwp-pagov/en/revenue/documents/formsandpublications/formsforbusinesses/employerwithholding/documents/rev-415.pdf))

- **Rate:** 3.07% flat, for residents and nonresidents earning income in Pennsylvania. The same rate applied in 2025.
- **Compensation** includes salaries, wages, commissions, bonuses, fees, stock options and tips, in cash or property. Differences from federal wages that matter for payroll:
  - Elective deferrals into 401(k) and other retirement plans, by salary reduction or payroll deduction, are taxable for Pennsylvania. Include them in PA wages on the W-2.
  - Employer payments to welfare benefit plans for medical, dental or vision care are generally not taxable.
  - Group term life insurance bought for employees is excluded if the program is not discriminatory. Pennsylvania has no $50,000 threshold.
  - Personal use of employer-provided property or services (for example a company car) is not compensation. A cash allowance or reimbursement for the same thing is.
  - Pay in lieu of vacation days, employer help with adoption costs and non-job-related education are taxable.
  - For other items, use the table in the Department's PIT Guide chapter on withholding ([PIT Guide, withholding](https://www.pa.gov/content/dam/copapwp-pagov/en/revenue/documents/formsandpublications/papersonalincometaxguide/documents/pitguide_withholding.pdf)).
- **No PA withholding is required** (the pay may still be taxable to the employee) for domestic servants in a private home, certain ministers, casual employees outside the normal course of business, certain agricultural workers, and some interstate transportation workers. Check the REV-415 list before relying on this.

### Deposit frequency ([REV-415](https://www.pa.gov/content/dam/copapwp-pagov/en/revenue/documents/formsandpublications/formsforbusinesses/employerwithholding/documents/rev-415.pdf); [Employer Withholding](https://www.pa.gov/agencies/revenue/resources/tax-types-and-information/employer-withholding))

| PA tax you can reasonably expect to withhold | Frequency | When payment is due |
| --- | --- | --- |
| Less than $300 per quarter | Quarterly | Last day of April, July, October and January |
| $300 or more, but less than $1,000, per quarter | Monthly | 15th of the next month for January to November; January 31 for December |
| $1,000 or more, but less than $5,000, per quarter | Semi-monthly | Within three banking days after each period ends. Periods end on the 15th and the last day of the month |
| $5,000 or more per quarter, or $20,000 or more per calendar year | Semi-weekly | Payday Wednesday, Thursday or Friday: the following Wednesday. Payday Saturday, Sunday, Monday or Tuesday: the following Friday |

- **Changing frequency:** ask for a more frequent schedule 15 days before the quarter starts. A less frequent schedule is allowed only at the start of a calendar year, and only if each quarter's amount is reasonably expected to fall below the current schedule's threshold.
- **Electronic payment:** any payment of $1,000 or more must be made electronically (ACH debit, ACH credit or card). The penalty for not doing so is 3% of the tax due, up to $500.

### REV-419, the Employee's Nonwithholding Application Certificate ([REV-419 and instructions](https://www.pa.gov/content/dam/copapwp-pagov/en/revenue/documents/formsandpublications/formsforbusinesses/employerwithholding/documents/rev-419.pdf))

- **There are only three grounds:**
  - (a) The employee qualified for Tax Forgiveness last year with a right to a full refund, or expects to qualify this year.
  - (b) The employee lives in a reciprocal state: Indiana, Maryland, New Jersey, Ohio, Virginia or West Virginia. You stop PA withholding only if you agree to withhold the home state's tax, and you must then withhold it. **Exception:** an Ohio resident who holds 20% or more of the shares of an S corporation and is paid wages by it is subject to PA tax on those wages. Keep withholding 3.07% on them, whatever the REV-419 says ([DFO-02](https://www.pa.gov/content/dam/copapwp-pagov/en/revenue/documents/formsandpublications/formsforindividuals/pit/documents/dfo-02.pdf)).
  - (c) The employee is a service member's spouse who meets the Servicemembers Civil Relief Act tests: both keep domicile in another state, the service member is in Pennsylvania under military orders, and the spouse is here only to be with them. The spouse attaches a military spouse ID and the current orders.
- **Timing:** the employee files a new REV-419 each year, with each employer. A reciprocal-state resident need not refile each year unless their state of residence changes.
- **Revocation:** the employee must revoke it in writing within 10 days of the day they expect to have PA tax liability for the year.
- **Send a copy to the Department** (Bureau of Individual Taxes) when:
  - you have reason to believe the certificate is incorrect;
  - a Tax Forgiveness claimant's PA taxable gross compensation exceeds $1,625 for any quarter;
  - the employee claims reciprocal-state residence; or
  - the employee claims the SCRA exemption.
- If the Department disapproves a certificate, start withholding at the regular rate at once. After a revocation by the Department, send any new certificate from that employee for approval before stopping withholding.
- Keep all nonwithholding certificates until the Department has audited the payroll period (REV-415).
- **Reciprocity covers PA income tax only.** It does not remove local EIT or the LST: an out-of-state resident still owes the worksite nonresident EIT rate and the LST ([DCED FAQ](https://dced.pa.gov/local-government/local-income-tax-information/local-withholding-tax-faqs/)).

### W-2s and the W-2 transmittal ([REV-415](https://www.pa.gov/content/dam/copapwp-pagov/en/revenue/documents/formsandpublications/formsforbusinesses/employerwithholding/documents/rev-415.pdf))

- **Due date:** whatever the federal due date, file W-2s with Pennsylvania by January 31 after the tax year. If the business ended during the year, file within 30 days of the end of business.
- **Transmittal:** file a REV-1667 Annual Withholding Reconciliation Statement with the W-2s, one for each FEIN. myPATH screen printouts do not replace it.
- **Method:** 10 or more W-2s must be filed electronically through myPATH. Fewer than 10 may use myPATH, TeleFile or paper.
- **Contents:** "Pennsylvania" on the form, PA taxable compensation, and PA tax withheld in the state tax box, with the usual employer and employee identifiers.
- **Terminated employees:** if one asks in writing and no further work is expected that year, furnish the W-2 by the 30th day after the request or after the last wage payment, whichever is later.
- **Penalty:** $50 for each willful false W-2, each willful failure to furnish one, and each W-2 missing required information.

### Local earned income tax under Act 32 ([DCED FAQ](https://dced.pa.gov/local-government/local-income-tax-information/local-withholding-tax-faqs/); [DCED employer steps](https://dced.pa.gov/local-government/local-income-tax-information/instructions-employers/))

- **Who must withhold:** every employer with a worksite in Pennsylvania. Worksites include factories, warehouses, branches, offices and the homes of home-based employees.
- **PSD codes** are six-digit numbers that identify each municipality. DCED's address search gives the PSD codes, EIT rates, LST rate and tax collector for both the home and the worksite.
- **The higher-of rule:** withhold the higher of the Total Resident EIT Rate for the home municipality and the Work Location Non-Resident EIT Rate for the worksite.
- **Out-of-state residents** working in Pennsylvania: the resident PSD code is 880000 and the resident rate is zero. Withhold the worksite nonresident rate, plus the LST.
- **PA residents working only outside Pennsylvania** for an out-of-state employer: that employer need not withhold local EIT, but may as a courtesy. If it does not, the employee makes quarterly estimated payments to their home collector.
- **Where the money goes:** register with, and pay, the collector for each worksite. You do not register with collectors for employees' home municipalities unless an employee works from home.
- **Multiple worksites:** you may elect to file and pay all EIT to one collector. You must then file and pay electronically and monthly, not quarterly. The option does not cover the LST.
- **Employees who move between job sites:** on an assignment of less than 90 consecutive days, treat the employer's permanent home office as the worksite. At 90 or more consecutive days, use the job location. Philadelphia work falls under the Sterling Act instead.

### Local Services Tax ([LST](https://dced.pa.gov/local-government/local-income-tax-information/local-services-tax/); [DCED FAQ](https://dced.pa.gov/local-government/local-income-tax-information/local-withholding-tax-faqs/))

- **Cap:** $52 per person per calendar year, however many municipalities the person works in. The municipality and school district together cannot levy more than $52.
- **Who withholds:** every employer with a worksite in the levying municipality, but only if the tax is listed in DCED's Official Tax Register. The LST follows the worksite, not the home. Where the combined rate is over $10, the place of employment is fixed on the first day the person becomes subject to the tax in each payroll period. At $10 or less, it is fixed on the first such day in the calendar year.
- **Combined rate over $10:** withhold pro rata over your payroll periods for the year, rounding each deduction down to the cent. A lump sum is not allowed. For example, $52 is $1 a week, or $4.33 a month. Withhold only for payroll periods in which the person is employed.
- **Combined rate of $10 or less:** you may take it as a lump sum from the first paycheck of the year.
- **Low-income exemption:** where the combined rate is over $10, the municipality must exempt anyone whose total earned income and net profits from all sources within it are less than $12,000 for the year. Where the rate is $10 or less, the exemption is optional. A school district's exemption may differ, anywhere from $0 to $11,999.
- **Upfront exemption certificate:** the employee files DCED's annual form with the municipality and with you, attaching last year's final pay stubs or W-2s from that municipality. Keep the form available and give it to new hires. On receipt, stop withholding for that year.
- **Restart withholding** when the municipality tells you to, when the employee says they no longer qualify, or when you pay the employee more than $12,000 for the year. Take a lump-sum catch-up for what was not withheld, then the normal per-period amount. Apart from watching the $12,000 point, you need not investigate exemptions.
- **Two or more jobs:** the employee pays at one place of employment per payroll period. Priority: (1) the principal office or principal employment; (2) where the employee lives and works, if it levies the LST; (3) the worksite nearest home. A secondary employer need not withhold if given a pay stub from the principal employer with DCED's statement of principal employment, and is relieved of liability if that information proves wrong.
- **Mandatory military exemptions:** reservists called to active duty; and honorably discharged veterans who are blind, paraplegic, or double or quadruple amputees from military service, or 100% disabled from a service-connected disability.
- **Rate changes** take effect on January 1. DCED releases the Official Tax Register on December 15.

### Unemployment compensation ([UC yearly tax highlights](https://www.pa.gov/agencies/dli/resources/for-employers-and-educators/how-to-file/uc-tax/yearly-tax-highlights); [UC-749 (09-25)](https://www.pa.gov/content/dam/copapwp-pagov/en/dli/documents/uc/employer/uc-tax-rates/uc-749%20rev%2009-25.pdf); [UC-820 (09-25)](https://www.pa.gov/content/dam/copapwp-pagov/en/dli/documents/uc/employer/uc-tax-rates/uc-820%20rev%2009-25.pdf))

| Item | 2026 | 2025 |
| --- | --- | --- |
| Employer taxable wage base, per employee per calendar year | $10,000 | $10,000 |
| Newly liable employer, not construction | 3.822% | 3.822% |
| Newly liable employer, construction | 10.5924% | 10.5924% |
| Experience-rated total rate, minimum | 1.419% | 1.419% |
| Experience-rated total rate, maximum (not delinquent) | 10.3734% | 10.3734% |
| Employee contribution, on all gross wages with no cap | 0.07% | 0.07% |

- **What makes up the total rate:** the basic rate, plus 3 points if the account is delinquent, plus a 9.2% surcharge on that sum, plus 0.60% Additional Contributions. The interest factor is zero for 2025 and 2026. The new-employer rates carry the surcharge only (3.5% × 109.2% and 9.7% × 109.2%); the 0.60% is not added unless the employer is also delinquent.
- **When the new-employer rate ends:** once the employer meets the experience requirements for Group 1, 2 or 3 on UC-820. An employer that is classifiable but does not meet its group's requirements gets 6.4968% if its reserve account balance is zero or positive, and 10.6464% if it is negative.
- **Delinquency:** for 2026, 3 points are added to the basic rate unless all registration and tax reports through the second quarter of 2025 were filed and paid.
- **Employee contribution:** withhold it when wages are paid, from all employees, including those of reimbursable employers. It is based on total gross wages in covered employment, not on PA income tax, so a REV-419 does not remove it. It is a trust fund; failing to withhold or pay it can bring fines, criminal prosecution and personal liability ([Employee withholding](https://www.pa.gov/agencies/dli/resources/for-employers-and-educators/how-to-file/uc-tax/employee-withholding)).
- **2026 rate notice deadlines:** the Department planned to mail Form UC-657 by December 31, 2025. For a notice with that date, a voluntary contribution to lower the rate was due January 30, 2026, and a rate appeal by March 31, 2026 (90 days). The surcharge and Additional Contributions cannot be appealed ([UC tax rates](https://www.pa.gov/agencies/dli/resources/for-employers-and-educators/how-to-file/uc-tax/uc-tax-rates)).

### Minimum wage ([Wage FAQs](https://www.pa.gov/agencies/dli/resources/compliance-laws-and-regulations/labor-management-relations/pennsylvania-s-minimum-wage-act/wage-faqs); [tipped worker rules](https://www.pa.gov/agencies/dli/resources/compliance-laws-and-regulations/labor-management-relations/labor-law/overtime-and-tipped-worker-rules-in-pa))

- **General:** $7.25 an hour. Most employees get overtime at 1-1/2 times their regular rate for hours over 40 in a week.
- **Tipped employees:** a tip credit needs all of these:
  - the employee earns at least $135 a month in tips;
  - the cash wage is at least $2.83 an hour, and cash wage plus tips reaches $7.25 an hour; the employer makes up any shortfall;
  - the employee spends no more than 20% of weekly hours on duties that do not directly generate tips. Time beyond that 20% must be paid at $7.25 an hour with no tip credit;
  - no tip credit at all for work that neither directly generates tips nor supports work that does (for example painting, backroom inventory, cleaning bathrooms).
- Card-processing fees may not be deducted from tips.

## Boundaries and exceptions

| Rule | Condition that decides it | Source |
| --- | --- | --- |
| Quarterly vs monthly deposits | Less than $300 expected per quarter is quarterly; exactly $300 is monthly | REV-415 |
| Semi-monthly | $1,000 or more but less than $5,000 per quarter | REV-415 |
| Semi-weekly | $5,000 or more per quarter, **or** $20,000 or more per calendar year. Either test is enough | REV-415 |
| REV-419 copy to the Department | Tax Forgiveness claimant's PA compensation **exceeds** $1,625 in any quarter; any reciprocal-state or SCRA claim; or you doubt the certificate | REV-419 instructions |
| Reciprocal-state resident | No PA withholding only with a REV-419 on file **and** the home state's tax withheld. Without the form, withhold 3.07% | REV-415 |
| Ohio resident paid wages by an S corporation | Holds 20% or more of the shares: reciprocity does not apply to those wages. Withhold 3.07% | DFO-02 |
| Nonresident working outside PA by choice | Days worked elsewhere for the employee's convenience count as PA days. Employer-required full-time telework from another state is not PA-source | PIT Guide; telework guidance |
| PA resident working in a no-income-tax state | Withhold PA tax on all compensation | REV-415 |
| Philadelphia resident working anywhere in PA | Act 32 does not apply. Withhold the Philadelphia resident rate and pay the City's Department of Revenue | DCED FAQ |
| Works in Philadelphia, lives elsewhere | Withhold the Philadelphia nonresident rate and pay the City. Refer any question of home-municipality EIT or credits to the City and the employee's adviser | DCED FAQ |
| Temporary job sites | Less than 90 consecutive days: employer's home office. 90 or more: the job location | DCED FAQ |
| LST instalments | Combined rate **over** $10 must be pro rata; $10 or less may be a lump sum | DCED LST page |
| LST low-income exemption | Income from the municipality **less than** $12,000. Restart when you pay **more than** $12,000. At exactly $12,000 the person is not exempt | DCED LST page |
| LST not on the Official Tax Register | Do not withhold it | DCED LST page |
| UC employer wage base | First $10,000 per employee per calendar year. The employee 0.07% has no cap | UC yearly tax highlights |
| UC electronic payment | Required once liability for a payment period equals or exceeds $5,000, and for every later payment | [UC-2 instructions](https://www.pa.gov/content/dam/copapwp-pagov/en/dli/documents/uc/uc-forms/uc-2ins.pdf) |
| Tip credit | At least $135 a month in tips; non-tip-generating duties no more than 20% of weekly hours (time beyond 20% paid at $7.25); never for work that neither generates nor supports tips | Tipped worker rules |

## Worked cases

The dollar amounts and all local EIT rates in these cases are made up for illustration. Look up real EIT rates by address with DCED. State rates and thresholds come from the sources linked in each heading.

### Case 1: resident employee, home and worksite in Pennsylvania ([Employer Withholding](https://www.pa.gov/agencies/revenue/resources/tax-types-and-information/employer-withholding); [LST](https://dced.pa.gov/local-government/local-income-tax-information/local-services-tax/))

- **Facts:** paid $3,000 every two weeks (26 pay periods) in 2026. Assumed home Total Resident EIT Rate: 1.5%. Assumed worksite nonresident rate: 1.0%. The worksite levies the $52 LST.
- PA tax: $3,000 × 3.07% = $92.10.
- Employee UC: $3,000 × 0.07% = $2.10.
- Local EIT: the higher rate is 1.5%, so $3,000 × 1.5% = $45.00, paid to the worksite collector.
- LST: $52 ÷ 26 = $2.00 a pay period.
- Total state and local deductions: $141.20.

### Case 2: New Jersey resident working in Pennsylvania ([REV-419](https://www.pa.gov/content/dam/copapwp-pagov/en/revenue/documents/formsandpublications/formsforbusinesses/employerwithholding/documents/rev-419.pdf); [DCED FAQ](https://dced.pa.gov/local-government/local-income-tax-information/local-withholding-tax-faqs/))

- **Facts:** paid $4,000 every two weeks. Files REV-419, box b, New Jersey. Assumed worksite nonresident EIT rate: 1.0%. The worksite levies the $52 LST.
- PA tax: none, because a REV-419 is on file. Withhold New Jersey tax instead, and send a copy of the REV-419 to the Department.
- Employee UC: $4,000 × 0.07% = $2.80.
- Local EIT: resident PSD 880000 with a rate of zero, against 1.0% at the worksite, so $4,000 × 1.0% = $40.00.
- LST: $52 ÷ 26 = $2.00.
- **Variation:** no REV-419 on file. Withhold PA tax: $4,000 × 3.07% = $122.80.

### Case 3: UC for a new employer in 2026 ([UC yearly tax highlights](https://www.pa.gov/agencies/dli/resources/for-employers-and-educators/how-to-file/uc-tax/yearly-tax-highlights); [UC-749 (09-25)](https://www.pa.gov/content/dam/copapwp-pagov/en/dli/documents/uc/employer/uc-tax-rates/uc-749%20rev%2009-25.pdf))

- **Facts:** a newly liable, non-construction employer pays one employee $60,000 in 2026.
- Employer contribution: $10,000 × 3.822% = $382.20. Wages above $10,000 are not taxable to the employer.
- Employee contribution: $60,000 × 0.07% = $42.00.
- **Same wages, experienced employer:** at the minimum total rate, $10,000 × 1.419% = $141.90. At the maximum, $10,000 × 10.3734% = $1,037.34.
- A newly liable construction employer would pay $10,000 × 10.5924% = $1,059.24.

### Case 4: deposit frequency ([REV-415](https://www.pa.gov/content/dam/copapwp-pagov/en/revenue/documents/formsandpublications/formsforbusinesses/employerwithholding/documents/rev-415.pdf))

- Expected PA withholding of $250 a quarter: quarterly. Q1 is due April 30.
- $800 a quarter: monthly. March tax is due April 15; December tax is due January 31.
- $4,500 a quarter: semi-monthly. Tax for the period ending on the 15th is due within three banking days after that date.
- $6,000 a quarter: semi-weekly. A Friday payday is due the following Wednesday; a Monday payday is due that Friday.
- Uneven quarters: $4,000 expected in some quarters, but $20,000 or more expected for the year. Semi-weekly, because the annual test is met.

### Case 5: LST exemption and catch-up ([LST](https://dced.pa.gov/local-government/local-income-tax-information/local-services-tax/))

- **Facts:** the worksite levies $52. The employer pays monthly, so the deduction is $4.33 a month. A part-time employee files the upfront exemption in January, expecting less than $12,000 from that municipality.
- No LST is withheld from January to September.
- In October a raise takes the employee's 2026 pay from the employer above $12,000. Restart in October: catch-up of 9 × $4.33 = $38.97, plus October's $4.33.
- Then withhold $4.33 in November and December.

### Case 6: REV-419 Tax Forgiveness claim ([REV-419](https://www.pa.gov/content/dam/copapwp-pagov/en/revenue/documents/formsandpublications/formsforbusinesses/employerwithholding/documents/rev-419.pdf))

- **Facts:** a student files REV-419 box a, expecting Tax Forgiveness. You stop PA withholding.
- In Q1 the student earns $1,400. That does not exceed $1,625, so no copy is required on that ground.
- In Q3 the student earns $1,800. That exceeds $1,625, so send a copy to the Department. If the Department disapproves it, restart withholding at 3.07% at once.

### Case 7: tipped server's make-up pay ([tipped worker rules](https://www.pa.gov/agencies/dli/resources/compliance-laws-and-regulations/labor-management-relations/labor-law/overtime-and-tipped-worker-rules-in-pa))

- **Facts:** a server who earns more than $135 a month in tips works 40 hours at a cash wage of $2.83 and receives $150 in tips that week. No more than 20% of the hours go on duties that do not directly generate tips, and none on work unrelated to tips, so the tip credit applies to all 40 hours.
- Minimum for the week: 40 × $7.25 = $290.00.
- Cash wage: 40 × $2.83 = $113.20. With tips: $263.20.
- Shortfall the employer must pay: $26.80.

## 2025 payrolls: corrections and late filings ([REV-415](https://www.pa.gov/content/dam/copapwp-pagov/en/revenue/documents/formsandpublications/formsforbusinesses/employerwithholding/documents/rev-415.pdf); [UC yearly tax highlights](https://www.pa.gov/agencies/dli/resources/for-employers-and-educators/how-to-file/uc-tax/yearly-tax-highlights))

- The PA rate, the deposit thresholds, the UC wage base of $10,000, the UC rate range, the new-employer rates and the 0.07% employee rate were the same in 2025.
- 2025 PA W-2s and REV-1667 were due January 31, 2026. The 2025 local W2-R reconciliation was due by the last day of February 2026 ([DCED employer steps](https://dced.pa.gov/local-government/local-income-tax-information/instructions-employers/)). If either is missing, file now; late charges may apply.
- **Correcting 2025 PA withholding:**
  - File an amended quarterly return with W-2Cs; one that lowers total withholding also needs an amended REV-1667. For a credit or refund, file within three years of the date the original payment was received.
  - Decreases for nonresident employees are not accepted; the employee files a PA-40NR for a refund.
  - An amended return is not a refund request. Ask for a refund in a signed written request.
  - Over-withholding not offset within 2025 is claimed by the employee on their own return.

## When to refuse or refer

- **Refer** Philadelphia wage tax rates, filing and credits to the City of Philadelphia Department of Revenue. This skill does not state them.
- **Refuse** to use a local EIT or LST rate from memory, from this skill's examples or from last year. Look it up by address with DCED for the current year.
- **Refer** multistate allocation beyond the working-day formula, remote-work residency questions, and the employee's own credits for tax paid to other states or cities, to the employee's tax adviser.
- **Refer** worker classification, final pay, overtime exemptions and wage disputes to an employment lawyer or the Department of Labor & Industry, and UC rate appeals, voluntary contributions, successor transfers and experience rating to the Office of UC Tax Services.
- **Refuse** to stop PA withholding for a reciprocal-state resident unless a REV-419 is on file and you are set up to withhold that state's tax. Refuse it in every case for wages an S corporation pays to an Ohio resident who holds 20% or more of its shares.
- **Say so** when a figure is not yet published. The 2027 UC rates, and any change to the state minimum wage, are not set by the sources above.

## Filing and payment

### Returns and due dates ([REV-415](https://www.pa.gov/content/dam/copapwp-pagov/en/revenue/documents/formsandpublications/formsforbusinesses/employerwithholding/documents/rev-415.pdf); [DCED employer steps](https://dced.pa.gov/local-government/local-income-tax-information/instructions-employers/); [UC quarterly reports](https://www.pa.gov/services/dli/file-unemployment-compensation-quarterly-wage-tax-reports))

- **PA quarterly withholding return:** due the last day of April, July, October and January, filed on myPATH or by TeleFile. File it every quarter, even with no tax. Monthly, semi-monthly and semi-weekly depositors also file it as the quarterly reconciliation. Preparers of 11 or more returns must file electronically.
- **PA W-2s with REV-1667:** January 31.
- **Local EIT and LST:** quarterly returns and payments to each worksite collector within 30 days after the quarter, or monthly and electronic if you elected a single EIT collector. The W2-R annual reconciliation is due by the last day of February.
- **UC-2 and UC-2A:** due April 30, July 31, October 31 and January 31, or the next business day if that falls on a weekend or legal holiday. File through UCMS, and file a UC-2 even for a quarter with no wages ([UC-2 instructions](https://www.pa.gov/content/dam/copapwp-pagov/en/dli/documents/uc/uc-forms/uc-2ins.pdf)).

### PA withholding penalties and interest ([REV-415](https://www.pa.gov/content/dam/copapwp-pagov/en/revenue/documents/formsandpublications/formsforbusinesses/employerwithholding/documents/rev-415.pdf))

- Interest runs daily on late tax, at the rate the Department announces each year.
- Failing to file a quarterly return: 5% of the underpayment per month or part month, up to 25%.
- Failing to pay withheld tax by the quarterly return due date: 5% per month or part month, up to 50%.
- A false or fraudulent return: 50% of the underpayment.
- Withheld tax is a trust fund. Officers, responsible employees and others can be personally liable, and willful failure can be prosecuted.

### UC penalties and interest ([UC contributions, penalties and interest](https://www.pa.gov/agencies/dli/resources/for-employers-and-educators/how-to-file/uc-tax/calculating-contributions--penalties-and-interest))

- Interest of 1% a month (12% a year) on late employer and employee contributions.
- A late quarterly report: 15% of the quarter's contributions, at least $125 and at most $450. Filing on time avoids this even if you cannot pay in full.
- Not filing electronically without a waiver: the same 15%, $125 minimum and $450 maximum.
- A dishonored payment: 10%, at least $25 and at most $1,000.

## Completion checklist

- Registered on myPATH for withholding and UC, and with the local collector for every worksite, including home-based employees.
- Every new hire and rehire reported through PA CareerLink within 20 days.
- A Residency Certification Form on file for every employee, with PSD codes and rates from a current DCED address search.
- PA tax withheld at the flat rate on the right compensation, including 401(k) deferrals.
- Every REV-419 fits one of the three grounds, copies went to the Department where required, and reciprocal-state residents have their home state's tax withheld.
- Local EIT at the higher of the two rates; Philadelphia under the City's rules.
- LST withheld pro rata for Register-listed worksites, with exemptions and the income-limit restart tracked.
- Employee UC on all wages; employer UC up to the wage base at the UC-657 rate.
- Deposits made on the right frequency, and electronically where required.
- Quarterly PA, local and UC returns filed; W-2s, REV-1667 and W2-R filed at year end.
- Pay rates at or above the state minimum wage, with tip credits only where allowed.

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## Talk to a verified accountant

This guide is maintained by the OpenAccountants network — accountants who put
their name behind the tax answers AI gives people. The live, always-current
version (and the professional behind it) is at
[openaccountants.com](https://www.openaccountants.com).

- Use it in your AI: https://www.openaccountants.com/connect
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> **General reference only.** This document does not constitute tax, legal, or
> financial advice. Verify figures against the cited primary sources or with a
> licensed professional before relying on them.

## Today's figures and who stands behind this skill

This file is an AI skill (tax rules your AI follows) from OpenAccountants, copied on 2026-10-16. Rates, thresholds and deadlines change. For the current version of this skill, its official sources and the named accountant (if any) who stands behind it, call `get_skill` with slug `pa-payroll` on the OpenAccountants connector (https://www.openaccountants.com/connect), or read https://www.openaccountants.com/skills/pa-payroll. If neither is available, confirm every figure against the official source pages cited above before relying on it.