Pennsylvania payroll taxes for employers (2026)
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Pennsylvania's new employer unemployment compensation rate is 3.822% on the first $10,000 of each employee's wages in 2026, set by the PA Department of Labor and Industry, and Pennsylvania taxes wages at a flat 3.07% (checked October 16, 2026). The hard part of PA payroll is local: almost every municipality and school district levies an earned income tax, so each employee's address and work site decide what you withhold.
- SUTA wage base
- $10,000
- New employer SUTA rate
- 3.822% (non-construction)
- State income tax
- Yes
- Minimum wage
- $7.25
On this page
Why Pennsylvania payroll is a local tax job
The state lines are simple. The local ones are not.
- Earned income tax under Act 32. Nearly all municipalities and school districts levy an EIT. You withhold it based on the employee's six-digit PSD code, and each new hire fills out a Residency Certification Form at hire and again after any move. The DCED publishes the codes and rates; our Pennsylvania local EIT guide shows how to look them up.
- Local Services Tax. Work-site jurisdictions can charge up to $52 a year per person. Where the levy is over $10, people earning under $12,000 there are exempt and the tax is taken in installments. You remit within 30 days after each quarter.
- Philadelphia Wage Tax. Since July 1, 2026 the city charges 3.735% for residents and 3.425% for nonresidents working in the city. PA employers withhold it from Philadelphia residents wherever they work. Rates and filing schedules are on our Philadelphia Wage Tax page.
- Employees pay UC too. Pennsylvania withholds 0.07% of all wages from workers for unemployment compensation, with no cap.
Two more PA quirks. The 3.07% income tax applies to residents wherever they work and to nonresidents working in the state, but PA has reciprocal agreements with Indiana, Maryland, New Jersey, Ohio, Virginia and West Virginia, so a commuter from those states may have home-state tax withheld instead. And construction is expensive: new construction employers pay 10.5924%, almost three times the standard rate. Pennsylvania has already published 2027: the $10,000 base and both new employer rates stay the same.
Pennsylvania employer payroll facts at a glance
| Item | Pennsylvania rule or rate | Official source |
|---|---|---|
| SUTA taxable wage base (2026) | $10,000 | source |
| New employer SUTA rate | 3.822% (non-construction) | source |
| New employer rate, construction | 10.5924% | |
| Surcharges and admin fees | Employee UC withholding 0.07% on all wages | |
| 2027 rates published? | yes. 2027 wage base $10,000 and new employer rates unchanged (3.822% / 10.5924%) | |
| Unemployment agency | PA Department of Labor and Industry, Office of UC Tax Services | source |
| State income tax withholding | Yes. Flat 3.07% on compensation of residents (wherever they work) and nonresidents working in PA. Reciprocal agreements with IN, MD, NJ, OH, VA, WV (withhold the home state's tax instead if PA tax not withheld). Supplemental treatment not stated on the page (flat rate applies to all compensation) | source |
| Paid leave or disability programs | none | |
| Minimum wage 2026 | $7.25 | source ; source |
| Tipped cash wage 2026 | $2.83 (tipped threshold $135 per month) | |
| Minimum wage 2027 | none announced | |
| New hire reporting | No later than 20 days after hire (federal maximum, 42 U.S.C. 653a). unconfirmed: pa.gov page read today does not state the deadline and the statute site blocked the fetch | source |
| Final paycheck rule | Fired or quit: next regular payday after separation (43 P.S. 260.5, Wage Payment and Collection Law) | source |
| Workers comp required | 1+ employee (no headcount minimum, includes part-time and family). Exempt only if every worker falls in an excluded category (casual workers, certain domestic and agricultural workers, sole proprietors or partners with no employees, member-only LLCs, religious exemption, excluded executive officers, commission-only real estate and insurance agents). Not monopolistic | source |
| Local income taxes | yes. Local earned income tax (EIT) in nearly all municipalities and school districts under Act 32, Local Services Tax (up to $52), Philadelphia Wage Tax | |
| PEO license or registration | no (Harbor Compliance lists PA with no state PEO license; secondary, verify) |
Checked October 16, 2026 against the official sources linked in each row.
Registering a Pennsylvania employer account
- Get an EIN from the IRS.
- Register for a UC tax account through the Department of Revenue's myPATH portal, which the L&I UC tax page links as "Register for a UC Tax Account Number," and register for state withholding with the Department of Revenue.
- For each work site, look up the EIT collector and any LST in the DCED register, and set up remittance with that Tax Collection District collector, usually organized by county.
- If you employ a Philadelphia resident or anyone working in the city, register with the Philadelphia Department of Revenue within 30 days.
- Buy workers comp. PA requires it from the first employee, including part-time and family workers, with narrow exemptions.
- Report new hires through the PA CareerLink new hire portal. The state page we read did not give a deadline; the federal maximum is 20 days.
Cost of a $50,000 employee in Pennsylvania
Here is the employer side for one full-year worker, with the construction rate shown as a second case.
| Payroll tax | Calculation | Per employee |
|---|---|---|
| OASDI (Social Security) | 6.2% x $50,000 | $3,100.00 |
| Hospital insurance (Medicare) | 1.45% x $50,000 | $725.00 |
| Federal unemployment tax | 0.6% x $7,000 | $42.00 |
| PA unemployment compensation (new, non-construction) | 3.822% of the first $10,000 | $382.20 |
| Total employer tax | $4,249.20 | |
| Same worker at a new construction employer | 10.5924% of the first $10,000 replaces the 3.822% line | $1,059.24 (total $4,926.24) |
Source: PA Department of Labor and Industry UC yearly tax highlights; IRS Topics 751 and 759. Checked Oct 2026.
The employee side is where Pennsylvania differs most from its neighbors, because so many deductions are local:
| Deduction | Rate | Per year |
|---|---|---|
| Employee UC contribution | 0.07% of all wages | $35.00 |
| PA personal income tax | Flat 3.07% | $1,535.00 |
| Local earned income tax (EIT) | Rate set by municipality and school district | Varies |
| Local Services Tax | Up to $52 a year where levied | Up to $52.00 |
Source: PA L&I, PA Department of Revenue, PA DCED. Checked Oct 2026.
Use the calculator to change the salary. It covers the employer taxes; local EIT depends on the address. Compare PA's rate with other states on our SUTA table.
Pay timing and other PA rules
A departing employee, fired or quitting, is paid by the next regular payday under the Wage Payment and Collection Law (43 P.S. 260.5, read through a secondary source). The US Department of Labor table lists no minimum pay frequency for Pennsylvania. The minimum wage is still the federal $7.25, with a $2.83 cash wage for tipped staff who make more than $135 a month in tips; see the state minimum wage list.
Choosing PA payroll software or a PEO
Local tax support is the test. Ask each provider whether it assigns PSD codes, withholds LST by work site and files with each Tax Collection District. OnPay includes federal, state and local filings in its $49 a month plus $6 per worker price. SurePayroll charges extra for local tax areas without saying how much (both checked October 16, 2026). See our payroll provider scores.
Pennsylvania does not license PEOs, according to Harbor Compliance (a secondary source). Ask a PEO for its IRS certification and its PA local tax process before signing, and compare options in the best PEOs for small businesses.
Frequently asked questions
What are Pennsylvania payroll taxes for employers?
What is the PA employee UC withholding rate?
Do Pennsylvania employers withhold local income tax?
Did Pennsylvania publish its 2027 unemployment rates?
Does Pennsylvania have reciprocity with other states?
Sources (16)
- PA Department of Labor and Industry: UC tax yearly highlights (2026 and 2027) (checked Oct 16, 2026)
- PA Department of Revenue: myPATH (UC and withholding registration) (checked Oct 16, 2026)
- PA Department of Revenue: Employer withholding (checked Oct 16, 2026)
- PA DCED: PSD codes and EIT rates (checked Oct 16, 2026)
- PA DCED: Local Services Tax (checked Oct 16, 2026)
- City of Philadelphia: Wage Tax for employers (checked Oct 16, 2026)
- PA Department of Labor and Industry: LIBC-200 workers compensation employer information (checked Oct 16, 2026)
- PA CareerLink: Report new hires (checked Oct 16, 2026)
- Teambridge (secondary): Pennsylvania final paycheck rule (checked Oct 16, 2026)
- OnPay: OnPay pricing (checked Oct 16, 2026)
- SurePayroll: SurePayroll pricing (checked Oct 16, 2026)
- IRS: Topic 751: Social Security and Medicare withholding rates (checked Oct 16, 2026)
- IRS: Topic 759: Form 940, FUTA tax (checked Oct 16, 2026)
- Social Security Administration: 2026 COLA fact sheet (wage base $184,500) (checked Oct 16, 2026)
- dol.gov/agencies/whd/minimum-wage/state (checked October 2026)
- pa.gov/services/dli/report-newly-hired-employees (checked October 2026)
This page is general information, not tax, legal or accounting advice. Rules and rates change, so check the official source linked above before you file or sign a contract. Read our disclaimer.