Pennsylvania Payroll Compliance
Every rate, wage base, and local tax layer Pennsylvania employers need for 2026 — sourced from the Dept. of Revenue and Dept. of Labor & Industry — including the 2,600+ local jurisdictions that make PA one of the most complex payroll states in the country.
Minimum Wage & Hours
Pennsylvania has not raised its minimum wage above the federal floor since 2009. Bills to raise it have repeatedly passed the state House but stalled in the Senate, leaving $7.25/hour as the 2026 rate statewide, including Philadelphia.
| Item | 2026 Value | Notes |
|---|---|---|
| State minimum wage | $7.25/hr | Unchanged since July 2009; tracks the federal floor |
| Tipped cash wage | $2.83/hr | Pennsylvania's own tip credit differs slightly from the federal $2.13 floor |
| Overtime rule | 40 hrs/week | Federal FLSA; no state daily overtime rule |
| Local wage ordinances | None | No PA city sets its own minimum wage |
| Legislative status | Stalled | Increase bills have passed the House but not the Senate as of 2026 |
Local Earned Income Tax (Act 32)
Pennsylvania is unusual: nearly every municipality and school district levies its own Earned Income Tax (EIT) on top of the state rate, standardized under Act 32. Philadelphia sits entirely outside Act 32 and runs its own Wage Tax instead. Employers withhold based on where the employee works, using PSD codes from the Residency Certification Form.
| Item | 2026 Value | Notes |
|---|---|---|
| Local EIT jurisdictions | 2,600+ | Rates typically range 1% – 3.75% depending on municipality/school district |
| Philadelphia Wage Tax (resident) | 3.74% | Effective July 1, 2025; adjusted annually each July 1 |
| Philadelphia Wage Tax (nonresident) | 3.43% | For employees working in Philadelphia but living elsewhere |
| Local Services Tax | Capped at $52/yr | Flat annual tax, separate from EIT |
| Lookup tool | DCED Act 32 tool | Identifies the correct local collector for each work location |
State Income Tax Withholding
Pennsylvania has applied a flat 3.07% personal income tax since 2004 — no brackets, no standard deduction, and the same rate on bonuses and supplemental pay as on regular wages.
| Item | 2026 Value | Notes |
|---|---|---|
| State withholding rate | 3.07% flat | Locked since 2004; applies to all compensation, including bonuses |
| Standard deduction | None | Flat-rate calculation has no deduction to apply |
| Required certificate | Form PA-4 (residency cert.) | Combined with the Local Residency Certification Form for EIT purposes |
| Reciprocity | IN, MD, NJ, OH, VA, WV | Residents file Form REV-419 to exempt PA withholding |
| Nonresident lease payments | $5,000+ threshold | Withholding required on PA real-estate lease payments to nonresidents |
Unemployment Compensation (UC)
Pennsylvania is one of only three states (with Alaska and New Jersey) that requires employee-side unemployment contributions in addition to the employer’s. The employee’s 0.07% has no wage cap at all — it applies to every dollar earned all year.
| Item | 2026 Value | Notes |
|---|---|---|
| Employer taxable wage base | $10,000 | Per employee, per year |
| Employee UC contribution | 0.07% | No wage cap — applies to 100% of gross wages all year |
| New employer (non-construction) | 3.822% | Includes the 9.2% surcharge and 0.60% additional contributions |
| New employer (construction) | 10.59% | Substantially higher entry rate for construction employers |
| Experienced range | 1.42% – 10.37% | Includes the 9.2% surcharge and 0.60% additional contributions add-ons |
| Interest Factor (2026) | 0.00% | No additional interest-related surcharge for 2026 |
| Rate notice forms | UC-748 / UC-749 / UC-820 | Annual contribution rate, rate chart, and experience-rating eligibility |
Paid Leave
Pennsylvania has no state disability insurance and no state paid family or medical leave program. Philadelphia runs its own local Paid Sick Leave ordinance separate from state law; other municipalities have no such requirement.
| Item | Status | Notes |
|---|---|---|
| State PFML | None | No payroll contribution required |
| State disability insurance | None | No state-run short-term disability program |
| Philadelphia Paid Sick Leave | Local ordinance | Applies only within Philadelphia city limits |
| Federal FMLA | Applies | Unpaid, job-protected; 50+ employee threshold |
Official Pennsylvania .gov Resources
Verify every figure and register for accounts at the source. PA employers coordinate across state, DCED, and city agencies for a single payroll run.