Pennsylvania employer payroll taxes and local taxes in 2026
A Pennsylvania employer pays unemployment compensation tax to the Department of Labor and Industry and withholds personal income tax for the Department of Revenue. Depending on where employees live and work, it also withholds local earned income tax and local services tax for local tax collectors and wage tax for the City of Philadelphia, and Pittsburgh adds a payroll expense tax that the employer bears. Rates, bases and dates below are as of November 2026.
What payroll taxes and local taxes does a Pennsylvania employer have to handle?
A Pennsylvania employer handles unemployment compensation (UC) tax, personal income tax withholding, local earned income tax (EIT) and local services tax (LST) withholding, and, depending on where employees live and work, a Philadelphia or Pittsburgh city tax. UC is Pennsylvania’s term for state unemployment tax (SUTA), and the Department of Labor and Industry (DLI) administers it.
Authority
What it covers
Who bears it
DLI
UC employer contributions and an employee contribution
The employer pays the contributions and withholds the employee contribution
Department of Revenue (Revenue)
Personal income tax withholding
Withheld from employee pay
Local tax collectors
EIT and LST
Withheld from employee pay and remitted by the employer
City of Philadelphia
Wage tax
Withheld from employee pay
City of Pittsburgh
Payroll expense tax
The employer, and the City says it may not be deducted from employee wages
The Department of Community and Economic Development (DCED) says an employer withholds and remits local taxes for each Pennsylvania worksite. Workers’ compensation insurance is a separate requirement that DLI states is mandatory for any employer with at least one employee who could be injured or develop a work-related disease in Pennsylvania, unless all employees are excluded.
How do I register as a Pennsylvania employer for unemployment tax and withholding?
A Pennsylvania employer registers online through myPATH, the Department of Revenue’s website, using the PA Online Business Tax Registration, which opens the withholding account with the Department of Revenue and the unemployment compensation accounts that the Department of Labor and Industry administers. An entity required to withhold must first obtain a Federal Employer Identification Number (FEIN) from the IRS.
DLI says all employers providing full or part-time employment to one or more workers must register with its Office of UC Tax Services. The deadline is 30 days after services covered by the UC Law are first performed for a new employer, 30 days after covered services resume for an employer that restarted wages after a break in employment, and 30 days from the transfer date for both predecessor and successor when one entity transfers all or part of its business or workforce to another.
An employer that misses the 30-day deadline is penalized with a 3 percent increase for UC delinquency added to its assigned rate, and DLI says it could face a penalty up to $10,000 per assessment, with civil fines and criminal prosecution possible for willful failure.
What unemployment compensation tax rate does a new Pennsylvania employer pay?
For 2026, a new Pennsylvania employer’s total UC rate is 3.8220 percent for non-construction employers and 10.5924 percent for construction employers, each including the 9.2 percent surcharge, and it applies for the first two or three calendar years the employer pays wages. Pennsylvania UC tax applies to the first $10,000 of each employee’s wages in a calendar year, and DLI lists the same $10,000 base for 2026 and 2027.
DLI’s basic new employer rates are 3.5 percent for non-construction employers and 9.7 percent for construction employers. Each total above is the basic rate increased by the 9.2 percent surcharge, and the 0.60 percent additional contributions tax does not apply to newly liable employers unless they are also subject to the 3 percent delinquency increase. A business receives the new employer rate when it first pays wages or resumes paying wages after four fiscal (July to June) years.
At the $10,000 base for one employee, a non-construction employer owes .038220 x $10,000 = $382.20 and a construction employer owes .105924 x $10,000 = $1,059.24. For 2027, DLI lists the same total new employer rates.
How does my Pennsylvania unemployment tax rate change after the new employer period?
After about two complete calendar years of covered employment and wages, an employer may receive an experience-based rate, which DLI’s Office of UC Tax Services calculates each calendar year from accumulated experience through June 30 of the preceding year. For 2026 and for 2027, DLI lists total experience-based rates from 1.4190 percent to 10.3734 percent, each including the 9.2 percent surcharge and the 0.60 percent additional contributions tax, with basic rates from 0.75 percent to 8.95 percent.
An employer with a sporadic employment history can be assigned a standard rate once it no longer qualifies as new, set for 2023 and thereafter at 6.4968 percent with a zero or positive reserve account balance and 10.6464 percent with a negative balance. DLI adds 3 percent to the basic rate, before the surcharge is calculated, for an employer that fails to file required registration documents or quarterly UC tax reports, or to pay contributions, interest and penalties due through the second quarter of the year before the rate year.
DLI issues a Contribution Rate Notice (UC-657) to every active contributory employer each year by December 31. An employer that disagrees may appeal within 90 days from the date of the rate notice, and has 30 days to appeal an adverse decision to the UC Tax Review Office. The surcharge and the additional contributions are not subject to appeal.
Do I withhold unemployment contributions from employees in Pennsylvania?
Pennsylvania also requires employers to withhold an employee contribution of 0.07 percent of gross wages for UC, with no cap on the wages it applies to, and DLI states the same 0.07 percent for 2027. It applies to all employees and is not subject to appeal.
Employers withhold it when wages are paid. Wages for this purpose include salary, commissions, bonuses and tips, sick or accident disability payments other than workers’ compensation, and the cash value of non-cash payments such as lodging and meals. DLI calls it a trust fund obligation and says failure to withhold and promptly pay can bring civil fines, criminal prosecution or personal liability, including liens against the employer and its officers and agents.
How much Pennsylvania income tax do I withhold from employee pay?
Pennsylvania requires employers to withhold personal income tax at a flat 3.07 percent of compensation from resident and nonresident employees earning income in Pennsylvania. As of November 2026, Revenue’s Employer Withholding page lists that rate and calls for withholding from resident employees who perform services within or outside Pennsylvania and from nonresident employees who perform services within Pennsylvania, except as reciprocal agreements provide. The requirement reaches every employer located or transacting business in Pennsylvania.
Under the Department of Revenue’s Employer Withholding Information Guide (REV-415, January 2023 edition), Pennsylvania compensation includes salaries, wages, commissions, bonuses and incentive payments, fees, stock options and tips, paid in cash or property, and non-cash compensation is valued at fair market value. For each payroll period the employer multiplies the compensation by the current rate, and supplemental pay is added to the current period’s compensation first.
Do I have to withhold local taxes in Pennsylvania, and which ones?
A Pennsylvania employer with a worksite in the state withholds the local earned income tax at the higher of the employee’s resident rate or the work-location nonresident rate, withholds the local services tax where one is levied, and remits both to the local tax collector within 30 days after each calendar quarter. DCED describes this as the Act 32 earned income tax rule and says Philadelphia remittances go directly to the City’s Department of Revenue.
A worksite can be a factory, warehouse, branch, office or the residence of a home-based employee. Philadelphia’s wage tax and Pittsburgh’s payroll expense tax are separate city taxes with their own rules.
How does the Philadelphia wage tax work for employers?
Philadelphia’s wage tax is outside Act 32 and, effective July 1, 2026, is 3.735 percent for residents and 3.425 percent for nonresidents, which employers withhold and the City of Philadelphia collects directly. As of November 2026, the City says all employed Philadelphia residents owe the tax regardless of where they work, and nonresidents who work in Philadelphia also owe it. All employers located in Pennsylvania must register with the City within 30 days of becoming an employer of a Philadelphia resident or of a nonresident who performs services for an employer in Philadelphia, and must withhold the tax from all employees who meet these criteria.
Employers file quarterly on the Philadelphia Tax Center, the City no longer accepts paper returns for this tax, and the fourth quarter counts as the final reconciliation. The City prints April 30, July 31 and October 31 as the 2026 due dates for the first three quarters and February 1, 2027 for the fourth. Payment frequency is quarterly for less than $350 withheld per month and monthly for $350 to $16,000 per month, with semi-monthly and weekly rows for $16,000 or more per month.
Does Pittsburgh have a separate employer payroll tax?
Pittsburgh levies its own payroll expense tax on employers at 5 1/2 mills (.0055, or .55 percent) of payroll expense for work performed in the City, and the City says the tax is levied on employers and may not be deducted from employee wages. As of November 2026, the City’s Taxes page says the tax applies to every person who hires, employs or contracts with one or more individuals as employees to perform work or render services within the City, and an employer does not need to be located in Pittsburgh to be subject to it.
Payroll expense is compensation, including salaries, wages, commissions, bonuses and stock options, paid to individuals who perform work or render services in whole or in part in the City. An employer not registered with the City registers within 15 days after first becoming an employer. Quarterly returns are due the last day of the second month after the quarter, which the City lists as May 31, August 31, November 30 and February 28 of the following year.
Pittsburgh separately states its local services tax as $52 a year, paid in even parts over four quarters, which employers withhold from earnings and remit to the City Treasurer.
When are Pennsylvania unemployment tax reports and payments due, and how do I file them?
Pennsylvania UC reports and payments are due April 30, July 31, October 31 and January 31, or the next business day when a date falls on a weekend or legal holiday, and employers file them electronically through the Unemployment Compensation Management System (UCMS). As of November 2026, DLI’s handbook due dates cover wages paid January 1 to March 31, April 1 to June 30, July 1 to September 30 and October 1 to December 31. In 2026 October 31 is a Saturday and January 31, 2027 is a Sunday, so DLI’s rule moves those dates to Monday, November 2, 2026 and Monday, February 1, 2027.
A report must be filed even if no wages were paid in the quarter.
Employers with 100 or fewer employees may enter wage detail online, and employers with more than 100 employees file it by file upload or file transfer protocol (FTP). Payment must be made electronically through UCMS when the total liability for a payment period is, or at any point was, $5,000 or more and the employer has no department-approved waiver. DLI says to keep each employee’s records for at least six years.
How often do I deposit Pennsylvania income tax withholding, and when are the returns due?
The Department of Revenue sets a Pennsylvania employer’s withholding deposit schedule by quarterly withholding (quarterly under $300, monthly from $300 to $999, semi-monthly from $1,000 to $4,999.99, and semi-weekly at $5,000 or more per quarter). As of November 2026, Revenue’s Employer Withholding page gives each schedule its deposit date.
Schedule
Deposit due
Quarterly
The last day of April, July, October and January
Monthly
The 15th day of the following month
Semi-monthly
Within three banking days of the close of the semi-monthly period
Semi-weekly
The Wednesday following paydays on Wednesday, Thursday or Friday, and the Friday following paydays on Saturday, Sunday, Monday or Tuesday
Under REV-415 (January 2023 edition), an employer requests a more frequent schedule 15 days before the start of any quarter, and a payment of $1,000 or more must be made electronically.
Every employer required to withhold files a Quarterly Withholding Return (W-3) through myPATH or TeleFile on or before the last day of April, July, October and January, and paper is not accepted. Revenue’s 2026 Due Date Reference Guide prints November 2, 2026 for the third-quarter deposit statement and W-3 return, February 1, 2027 for the fourth quarter and the December 2026 monthly deposit, and January 31, 2027 for all 2026 W-2 forms.
How do I find local tax rates, register and remit local taxes in Pennsylvania?
DCED’s instructions for employers give four steps, from looking up rates by address to remitting what the employer withholds.
1. Look up political subdivision (PSD) codes, the six-digit numbers that identify each municipality, and EIT and LST rates by address in DCED’s Address Search Application, and print or save the report.
2. Complete a Residency Certification Form for each employee at hire and keep a copy in the personnel file.
3. Register with the local tax collector for each worksite to obtain a local tax ID number, through the collector’s website shown on the Address Search report or on a paper Employer Registration for Local Earned Income Tax Withholding form.
4. Withhold and remit the taxes, and file the W2-R annual reconciliation with the collector on or before the last day of February after the year ends.
If an address returns no result, DCED says to work out the county for the address and contact the tax collector or officer for local rates and PSD codes. An employer with worksites in several tax collection districts may remit all EIT withholdings to a single collector if it files and remits electronically and monthly, and that option does not apply to the LST. It registers with each collector, asks one to act as the single collector, and notifies the others on the Notice of Intent to File Combined Returns and Make Combined Payments form.
How does the local services tax work, including the $52 limit and exemptions?
The combined municipal and school local services tax is limited to $52 a year. The amount at a worksite is whatever the municipality and school district levy, as the Address Search report shows, so $52 is a ceiling and not a flat charge. As of November 2026, DCED says an employer deducts the LST at the site of employment if the tax is listed in the Official Tax Register, and is not required to withhold if the municipality’s and school district’s rates are not listed.
When the combined rate is more than $10, the employer collects the tax pro rata by the number of payroll periods it has in the calendar year, rounds the per-period share down to the nearest one-hundredth of a dollar, and may not withhold in a lump sum. A combined rate of $10 or less may be collected in a lump sum.
A political subdivision that levies an LST above $10 must exempt a person whose total earned income and net profits from all sources within it are under $12,000 for the calendar year, and one that levies $10 or less may exempt such a person. The school district’s exemption can differ, anywhere from $0 to $11,999. An employee claims the exemption on an annual form filed with the political subdivision and the employer, which stops withholding for that calendar year on receipt, and employers give the forms to new employees at hire. Withholding restarts, with a catch-up lump sum, if the political subdivision instructs it, if the employee says the exemption no longer applies, or if the employer pays the employee more than $12,000 for the calendar year.
What do I withhold locally when an employee lives outside Pennsylvania or travels between sites?
An employer of an employee who lives outside Pennsylvania but works at a Pennsylvania worksite completes the Residency Certification Form with resident PSD code 880000 and a 0 percent resident EIT rate, withholds the Work Location Non-Resident EIT Rate and the LST for the worksite municipality, and remits to the worksite collectors, as DCED’s FAQs state.
For an employee who lives in Pennsylvania but physically works outside Pennsylvania for an out-of-state employer, DCED says the employer is not required to complete the form or withhold the local EIT, and the employee still owes the resident EIT rate for the home municipality.
For employees who travel from site to site or have temporary assignments, the employer withholds the greater of the resident tax or the nonresident tax based on the location of the employer’s permanent home office for fewer than 90 consecutive days at a job location. At 90 or more consecutive days, it uses the job location. Employees working in Philadelphia are covered under the Sterling Act.
Do I have to report new hires in Pennsylvania?
Pennsylvania employers report each new hire to the Pennsylvania New Hire Reporting Program within 20 days of the date of hire, which is the first day services are performed for wages.
DLI says employers report all employees who live or work in Pennsylvania regardless of length of employment, including re-hired employees and employees returning after a break in service or gap in wages. The report needs the employer’s name, address, FEIN and contact, and the employee’s full legal name, address, Social Security number, date of hire and state of hire.
Electronic reporting through PA CareerLink is preferred, with manual entry for 10 new hires or fewer and file upload for 10 or more. Fax or mail is allowed with a W-4 or the Commonwealth New Hire Reporting Form, but not for a multistate employer. DLI says not to submit new hire data by email.
What penalties and interest apply if I file or pay late in Pennsylvania?
Pennsylvania unemployment tax, income tax withholding, the Philadelphia wage tax and the Pittsburgh payroll expense tax each carry their own interest and penalties for late filing or payment.
For UC, DLI charges interest of 1.0 percent per month or fraction of a month (12 percent a year) on unpaid contributions from the due date until paid. A late quarterly report carries a penalty of 15 percent of the total contributions payable for the quarter, with a minimum of $125 and a maximum of $450, and the same applies to non-compliance with the electronic filing requirement without an approved waiver. If a report cannot be paid in full on the due date, filing it on time avoids the penalty while interest keeps accruing.
For Pennsylvania income tax withholding, REV-415 (January 2023 edition) lists a penalty of 5 percent per month of the underpayment for failing to file a quarterly return, up to 25 percent, and an additional tax of 5 percent per month, up to 50 percent, for failing to pay withheld taxes by the due date of the quarterly reconciliation return. Withheld taxes are a trust fund, and an officer, director, partner or other person with a duty to collect or pay may be held personally liable.
Philadelphia adds interest and penalties to late wage tax payments at the rate specified by Philadelphia Code 19-509. Pittsburgh states that late payments of its payroll expense tax draw interest and penalties.
Which state’s rules apply when an employee works in more than one state?
Unemployment wages follow a four-question test in the DLI handbook, and Pennsylvania income tax withholding follows the employee’s residence and work location.
1. If the work is mostly in Pennsylvania with only minor or temporary tasks elsewhere, report all wages to Pennsylvania.
2. If not, and some work is done in the state where the employer’s base of operations is located, report there.
3. If there is no base of operations and the work is directed or controlled from a state in which the employee works, report there.
4. Otherwise, if some work is done in the state where the employee lives, report there.
For income tax, the Department of Revenue’s rules have an employer withhold Pennsylvania tax from a nonresident who works in Pennsylvania unless a reciprocal agreement applies, and from a Pennsylvania resident who works entirely in another state unless that state has an income tax and the employer withholds it. For a nonresident who works partly in and partly outside Pennsylvania, only the Pennsylvania share is subject, found by (Pennsylvania working days / total working days) x total compensation, but the employer withholds on all compensation unless it keeps adequate records of the Pennsylvania-source amount.
Reciprocal agreements cover Indiana, Maryland, Ohio, New Jersey, Virginia and West Virginia. For a resident of one of those states working in Pennsylvania, no Pennsylvania withholding is required if the employee files Form REV-419 with the employer and the employer withholds the home state’s income tax and pays it to that state.
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