Pennsylvania local earned income tax and LST

How a PSD code points to a rate

Every Pennsylvania address maps to a Political Subdivision (PSD) code. Read it left to right:

First 2 digits

Tax collection districtusually the county

First 4 digits

School district

All 6 digits

Municipality

Each new hire fills out a Residency Certification Form, and fills it out again after any change of address. You take the PSD code from that form, then find the rate in DCED's register. The official register takes effect January 1 and July 1; a real-time register shows changes as local governments file them. DCED also runs an address search for employees who do not know their code.

Two details DCED's page does not state, so treat them as open questions for your collector: the commonly cited rule that you withhold the higher of the employee's resident rate or the work location's nonresident rate, and the exact remittance deadlines. The tax collection district for the work location sets those. Philadelphia is outside Act 32 and runs its own Philadelphia Wage Tax.

The rates and rules

What EIT and LST add to a $60,000 paycheck

Because the EIT rate depends on the address, here is the math per step of rate. These are illustrative rates, not the rate of any particular town.

Each 0.1 point of EIT costs this employee $60 a year. On top: the state's flat 3.07% ($1,842.00), employee unemployment compensation of 0.07% ($42.00), and the LST. A $52 LST spread over 26 biweekly checks is $2.00 a check. Your employer-side taxes are on the Pennsylvania payroll taxes page.

The Local Services Tax, rule by rule

• It follows the work site. Every employer with a work site in a levying jurisdiction withholds from the employees at that site, each payroll period.
• The cap is per person. The combined municipal and school district LST tops out at $52 a year for each taxpayer, no matter how many jurisdictions or jobs are involved.
• Low earners can be exempt. Where the levy is more than $10, people earning under $12,000 a year there are exempt, and the tax is collected in pro-rated installments rather than all at once.
• Only register-listed rates count. DCED says to withhold LST only if the rate appears in the Official Tax Register.
• Quarterly remittance. You send it to the designated collector within 30 days after each calendar quarter.

Setting up a new Pennsylvania work site

1. Look up the work site's PSD code and its tax collection district in the DCED register or address search.
2. Register with that district's EIT collector before the first payroll.
3. Check whether the work site municipality or school district levies an LST, and what amount.
4. Collect a Residency Certification Form from every employee, including remote staff.
5. Load each employee's home PSD code and rate into payroll, and calendar the January 1 and July 1 register updates.
6. Remit LST within 30 days after each quarter and EIT on the schedule your collector gives you.

Where employers get EIT wrong

• Addresses go stale. An employee who moves to a new township has a new PSD code. Without a new Residency Certification Form, you keep withholding the old rate and the employee gets a bill.
• Remote staff get the headquarters code. Coding a home-based employee with the office PSD gets the residence side wrong. DCED's pages do not say how LST applies to a home office, so ask the collector.
• Double LST. A worker with two jobs can be over-withheld past the $52 per-person cap. Keep a process for employees who show the LST is already paid elsewhere.
• Missing the mid-year register. Rates can change July 1 as well as January 1.
• Out-of-state employees. A New Jersey or Ohio resident working at a PA site still has a work-location EIT question even though PA's state reciprocity may switch their state withholding. Ask the collector.

What to check in payroll software

Ask any provider whether it stores a PSD code per employee, files with each tax collection district, and handles LST exemptions and the $52 cap. OnPay's pricing page says local tax filings are included in $49 a month plus $6 per worker; SurePayroll lists local tax areas as an extra, unpriced fee (both checked October 16, 2026). See how payroll providers compare, the payroll taxes overview, 2026 SUTA rates by state and how Ohio cities handle the same problem.