Pennsylvania Local Earned Income Tax: How the System Works
Pennsylvania's 3.07% state rate is famously flat and famously low. It is also only part of the bill. Municipalities and school districts across the commonwealth levy a local Earned Income Tax on top, typically around 1% combined but set locally and varying by address. As in Ohio, there are too many jurisdictions to list a rate for each, so this page explains the system and points at the official lookup.
What the Earned Income Tax reaches
The EIT is a tax on earned income — wages, salaries, commissions and net profits from a business. The word does real work here: it does not reach pensions, Social Security, interest or dividends.
That matters more in Pennsylvania than almost anywhere else, because the state itself already exempts retirement income. A retired Pennsylvanian with no wages typically owes neither the state tax nor the local EIT — see the Pennsylvania state page for the retirement treatment.
Act 32 and county-wide collection
Before 2008, EIT was collected by hundreds of separate local collectors. Act 32 of 2008, signed on 7 July 2008, consolidated the commonwealth into county-wide tax collection districts, each overseen by a tax collection committee that appoints a single collector for the district.
Employers remit withholdings to the tax collection district where they are located, within 30 days of the end of each quarter, and the district distributes the money to the municipality and school district entitled to it.
The resident versus non-resident rule
Pennsylvania resolves the live-here/work-there problem differently from Ohio. Under Act 32, an employer withholds the higher of the employee's total resident EIT rate and the non-resident EIT rate of the municipality where they work, and remits it to the workplace collector.
The practical effect is that you generally pay the higher of the two rates rather than both, and the collectors settle the split between themselves. It also means a pay rise or an office move can change your local rate without you doing anything.
Employees complete a Residency Certification Form so the employer can identify both the resident and workplace jurisdictions and apply the rule.
The school district layer
Act 50 of 1998 authorised school districts to levy EIT at rates up to 1.5%, but only with voter approval by referendum. Two limits are worth knowing:
- School districts may not levy the EIT on non-residents at all.
- The rate you see on a payslip is usually the combined municipal plus school district rate, not one or the other.
How to find your own rate
The Department of Community and Economic Development publishes the official municipal and school district EIT rates, searchable by address, along with the collector for each district.