Payroll Tax Guide:
Pennsylvania

Pennsylvania uses a flat state income tax rate with no deductions or allowances, making it one of the simplest states for income tax withholding. However, the simplicity at the state level is offset by an extensive system of local taxes, including Earned Income Tax (EIT) and Local Services Tax (LST) in many municipalities. 

Pennsylvania imposes a flat state income tax rate of 3.07%. There is no state-specific withholding form, no standard deduction, and no personal allowances. The tax is simply calculated as a flat percentage of gross taxable wages. While state withholding is simple, employers must also manage local Earned Income Tax (EIT) and Local Services Tax (LST) in the employee’s resident and work municipalities. 

Pennsylvania supports the following supplemental calculation methods. When using the flat method, the supplemental rate is 3.07%. 

Your assigned SUTA rate will be based on your company’s experience with unemployment claims. New employers typically start at the default rate of 3.6890%. 

Local Taxes: Pennsylvania has earned income taxes (EIT), local services taxes (LST) that may apply depending on the employee’s work and residence location. Be sure to verify which local jurisdictions apply to each employee.