The payment and withholding of earned income taxes (“EIT taxes”) in Pennsylvania at times seems like a complex maze and is challenging for human resource professionals or a company’s payroll tax team. In May, Pennsylvania amended its Local Tax Enabling Act. Most Pennsylvania municipalities levy an earned income tax on their residents at the rate of 1%. Nearly all municipalities also have a “non-resident” EIT tax rate, which is the same or higher than the rate for “residents.” Some distressed municipalities have a higher EIT tax rate, resulting in the division of withholding taxes between the employee’s resident municipality and the workplace municipality.
Click on the icon below to download the entire article and a reference chart to assist employers in traversing through this EIT withholding maze.
If you have any questions about Act 32 or EIT issues, please contact the author of this article.