Pennsylvania Paycheck Calculator — Pa Local Eit

Calculate your net pay in Pennsylvania with our accurate 2025 paycheck calculator. Understand the 3.07% flat state tax, navigate complex Local Earned Income Tax (EIT) rates, and estimate your take-home pay after federal and state withholdings.

How Pennsylvania Taxes Your Paycheck

Pennsylvania uses a unique flat-tax system for state income tax, but the complexity often lies in the local taxes. Unlike the federal government or many other states that use progressive tax brackets, Pennsylvania charges the same rate regardless of how much you earn. This makes the state tax calculation relatively straightforward, but the local layers add nuance.

1. Pennsylvania State Income Tax (3.07%)

The Pennsylvania personal income tax rate is 3.07%. This is one of the lowest flat tax rates in the country. Whether you earn $30,000 or $3,000,000, you pay 3.07% on your taxable income.

Note on Deductions: Pennsylvania does not have a standard deduction or personal exemptions like the federal system. However, it does offer "Tax Forgiveness" for low-income taxpayers, which is a credit claimed when filing your return, not typically adjusted in paycheck withholding. Furthermore, PA allows specific deductions that the federal government might not, such as unreimbursed business expenses (with limitations).

2. Local Earned Income Tax (EIT) and Act 32

This is where PA taxes get complicated. Most municipalities and school districts in Pennsylvania levy an Earned Income Tax (EIT) on wages. Passed in 2008, Act 32 consolidated the collection of these taxes to ensure they are properly distributed.

• Typical Rates: The most common rate is 1.0% (often split 0.5% to the municipality and 0.5% to the school district). However, many home rule municipalities have rates significantly higher.
• Resident vs. Non-Resident: You typically pay the rate of the municipality where you live. However, if your home municipality has no tax, you might be liable for a non-resident tax where you work. Your employer is required to withhold the higher of the two rates if you work in a jurisdiction with a higher non-resident tax than your resident tax, although generally, you owe your resident rate.
• PSD Codes: Employers use Political Subdivision (PSD) Codes to ensure the tax is sent to the correct jurisdiction. It is critical that you provide your employer with your correct address so they use the right PSD code.

3. PA Unemployment Compensation (UC)

Pennsylvania is one of the few states that requires employees to contribute to the state unemployment fund. For 2025, the employee withholding rate is 0.07% of gross wages.

This is deducted from every paycheck and is separate from the employer's contribution. While small (only 70 cents on $1,000 earned), it is a mandatory deduction that helps keep the unemployment system solvent.

4. Local Services Tax (LST)

Many municipalities also charge a Local Services Tax (LST) for working within their jurisdiction. This is a tax for the privilege of working in that location.

• Maximum Rate: $52 per year.
• Low Income Exemption: If you earn less than $12,000, you are often exempt from this tax.
• Collection: Employers typically deduct this pro-rata from each paycheck (e.g., $1 per week).

Federal Taxes and FICA

In addition to state and local taxes, your paycheck is subject to federal deductions. You can use our Federal Paycheck Calculator to see how these affect your take-home pay across the country:

• Federal Income Tax: Calculated based on your W-4 information, filing status, and tax brackets (10% to 37%).
• Social Security: 6.2% of wages up to the wage base limit ($176,100 for 2025). This is a flat tax until you hit the income cap.
• Medicare: 1.45% of all wages, with an additional 0.9% for high earners (typically over $200k). There is no income cap for standard Medicare tax.

Reciprocal Agreements: Living in NJ, Working in PA?

Pennsylvania has reciprocal tax agreements with six states: Indiana, Maryland, New Jersey, Ohio, Virginia, and West Virginia. This is extremely common for residents of New Jersey (like Cherry Hill or Camden) who commute to Philadelphia.

How it works:

1. If you live in New Jersey and work in Pennsylvania, you owe New Jersey income tax, not Pennsylvania income tax.
2. You must file Form REV-419 (Employee's Nonwithholding Application Certificate) with your PA employer.
3. Your employer will stop withholding PA tax. You should then ask them to withhold NJ tax (if they can) or make estimated payments to New Jersey.

Crucial Exception: This does not apply to the Local EIT or Wage Tax in many cases. For example, if you work in Philadelphia, you must pay the Philadelphia Non-Resident Wage Tax regardless of where you live. New Jersey will often give you a credit for this on your NJ tax return, but you cannot avoid the withholding on your paycheck.

Pennsylvania Deductions and Credits

While PA doesn't have a standard deduction, it offers targeted tax breaks that can save you money.

PA 529 College Savings Plan

Pennsylvania offers a fantastic deduction for contributions to a PA 529 plan. For 2025, you can deduct up to $18,000 per beneficiary per year (married couples can deduct up to $36,000). This is one of the highest limits in the country. This deduction directly reduces your taxable income for state tax purposes, saving you 3.07% of your contribution.

Unreimbursed Business Expenses

Unlike federal law (which suspended this deduction for most employees), Pennsylvania still allows employees to deduct certain unreimbursed business expenses, such as union dues, professional license fees, and required work clothing. You must complete PA Schedule UE to claim these.

Frequently Asked Questions (FAQ)

Pennsylvania Tax Forgiveness

Pennsylvania offers a unique Tax Forgiveness program that allows eligible claimants to reduce all or part of their PA personal income tax liability. This is designed to help low-income workers and retirees.

• Eligibility: Based on your income and family size. For example, a family of four earning less than roughly $34,250 may qualify for 100% forgiveness.
• How to Claim: You must file a PA-40 tax return and complete Schedule SP. It is *not* automatically handled by paycheck withholding, but you can adjust your withholding if you know you will qualify.

If you qualify, you will get a refund of the state tax withheld from your paycheck when you file your return.

Retirement Income Taxation in Pennsylvania

Pennsylvania is one of the most tax-friendly states for retirees. Unlike many other states, PA does not tax most forms of retirement income at the state level. This includes Social Security benefits, pension income, and 401(k) or IRA distributions. However, the unique early taxation of 401(k) contributions (mentioned above) means that when you withdraw during retirement, you have already paid the state tax on those funds.

Key Retirement Benefits:

• Social Security: Fully exempt from Pennsylvania state income tax.
• Pension Income: Exempt if from an employer-sponsored retirement plan.
• 401(k) and IRA Withdrawals: Generally not taxed again if contributions were taxed when made.
• Military Retirement Pay: Fully exempt from Pennsylvania state income tax.

Pennsylvania Sales Tax Overview

While our calculator focuses on paycheck deductions, understanding the broader Pennsylvania tax picture helps with financial planning. Pennsylvania has a statewide sales tax of 6%, with an additional 2% in Philadelphia (total 8%) and 1% in Allegheny County (total 7%). However, many essential items are exempt from sales tax, including:

• Most groceries and food items
• Clothing
• Prescription and non-prescription medications
• Residential heating fuels

These exemptions can significantly reduce your overall tax burden compared to states that tax clothing or groceries.