Pennsylvania payroll taxes, 2026
Pennsylvania withholds a flat 3.07% of compensation, a 0.07% employee unemployment contribution, and usually a local earned income tax and a local services tax of up to $52 a year. Philadelphia adds its own wage tax.
State income tax withholding
Pennsylvania withholds 3.07% of compensation. There is no standard deduction or exemption in the withholding rate. Employers must withhold from residents wherever they work and from nonresidents who earn income in Pennsylvania, unless the employee lives in a reciprocal state (Indiana, Maryland, Ohio, New Jersey, Virginia, West Virginia).
The Department of Revenue employer withholding page sets deposit frequency by the quarterly total: quarterly under $300, monthly from $300 to $999, semi-monthly from $1,000 to $4,999.99, and semi-weekly from $5,000. Employers file a quarterly return and W-2s, and those with 10 or more income statements file electronically.
Unemployment tax (SUI)
Employers pay unemployment contributions on the first $10,000 of each employee’s wages, at an experience-based rate the state assigns each year (Department of Labor & Industry, checked October 19, 2026). Employees also contribute 0.07% of gross wages for 2026, confirmed in the Pennsylvania payroll memo 26-01. On a $60,000 salary that is $42 for the year. The paycheck calculator includes this line, figured on Social Security wages, so it can differ by a few cents from an employer that includes pre-tax benefits in gross wages. For 2026 the Department of Labor & Industry lists employer experience rates from 1.419% to 10.3734%; confirm your own rate on your rate notice.
Local earned income and services taxes
Under Act 32 most Pennsylvania municipalities and school districts levy an earned income tax. The Department of Community and Economic Development describes the local services tax (LST). Earned income tax rates and withholding rules differ by municipality and are set under Act 32, so confirm the rate that applies to you with your local tax collector or DCED. The calculator lets you type a local rate instead of guessing one.
The local services tax is limited to $52 a year in total. Where the combined rate is above $10, it is withheld in per-pay-period installments. Philadelphia has its own wage tax: 3.735% for residents and 3.425% for nonresidents on wages paid after June 30, 2026. See the Philadelphia paycheck calculator.
What a Pennsylvania paycheck looks like
Pennsylvania has the same federal rules as every state, plus the lines above. For a minimum-wage worker earning $7.25 an hour, full-time gross is $15,080.00 a year; see the Pennsylvania minimum wage. Use the Pennsylvania paycheck calculator for your own pay, and the Pennsylvania hourly to salary calculator to restate a wage. Pennsylvania taxes 401(k) deferrals, and the calculator adds them back to state wages. Checked October 19, 2026.
| Salary | Biweekly net | State tax and programs per year | Net per year |
|---|---|---|---|
| $40,000 | $1,271.69 | $1,256.00 | $33,063 |
| $60,000 | $1,865.60 | $1,884.00 | $48,505 |
| $80,000 | $2,407.61 | $2,512.00 | $62,597 |
| $100,000 | $2,924.61 | $3,140.00 | $76,039 |
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Questions
What is the Pennsylvania income tax withholding rate?
A flat 3.07% of compensation, withheld from residents and from nonresidents who earn income in Pennsylvania, according to the Department of Revenue. The January 2026 state payroll memo confirms it stays 3.07% for 2026.
Do employees pay unemployment tax in Pennsylvania?
Yes. Pennsylvania is one of the few states where employees contribute: 0.07% of gross wages in 2026. Unlike the employer tax, it is not limited to the first $10,000 of wages.
What is the Pennsylvania local services tax?
An annual tax on people who work in a municipality, capped at $52 a year across all local levies. Whether it applies at a work location depends on the municipality, so confirm with your employer or local tax collector. Where it applies it is withheld in installments when the combined rate is above $10. Workers with earned income under $12,000 in the jurisdiction are exempt where the locality levies more than $10.
Which states have reciprocity with Pennsylvania?
Indiana, Maryland, Ohio, New Jersey, Virginia, and West Virginia. Residents of those states who work in Pennsylvania are not subject to Pennsylvania withholding, and the employer withholds their home state tax instead.
What is the Pennsylvania unemployment wage base?
$10,000 per employee per calendar year, unchanged since 2018. Employer rates are assigned each year: the Department of Labor & Industry lists 2026 experience rates from 1.419% to 10.3734%, and newly liable non-construction employers pay 3.822% including the surcharge. Confirm your assigned rate on your L&I rate notice.