Withholding Taxes: Pennsylvania

Federal law and guidance on this subject should be reviewed together with this section.

Author: Vicki M. Lambert, The Payroll Advisor

Summary

• Wages paid to Pennsylvania residents who work in the state are subject to withholding. Pennsylvania income tax must also be withheld from wages paid to nonresident employees for services performed in the state, unless there is a reciprocal income tax agreement in place between Pennsylvania and the other state. See Withholding on Residents, Nonresidents and Expatriates.
• Pennsylvania does not use federal Form W-4 or an equivalent state form to determine employee withholding. However, certain employees may file Form REV-419, Employee's Nonwithholding Application Certificate, to claim an exemption from Pennsylvania income tax withholding. See Employee Withholding Exemption Form.
• To withhold Pennsylvania income tax from supplemental wage payments, employers must combine the supplemental wage payments with regular wages and withhold on the total. See Supplemental Wages.
• Each year employers must provide copies of federal Form W-2, Wage and Tax Statement, to each employee. See Form W-2 Requirements.
• Employers in the City of Philadelphia are required to give employees notice of the federal Earned Income Tax Credit on an annual basis. See Earned Income Tax Credit Notices.
• Employers are required to keep records of wages paid and taxes withheld. See Recordkeeping Requirements.
• In addition to withholding for state income taxes, Pennsylvania employers are also required to withhold from employees' wages for various local payroll taxes. See Local Payroll Taxes.