Pennsylvania Local Taxes Explained: Earned Income Tax, LST, PSD Codes

Besides Pennsylvania’s own 3.07%, two local taxes can come out of your pay. The first is the local earned income tax, a percentage of pay, most often 1%. Your employer withholds the higher of two rates: your home town’s resident rate and your work town’s non-resident rate. The second is the local services tax, a flat amount of up to $52 a year, charged where you work and split across your paychecks.

Philadelphia is the big exception: it has its own Wage Tax instead, explained in our Philadelphia Wage Tax guide. The rules on this page come from the Pennsylvania Department of Community and Economic Development (DCED), which keeps the official register of the 2,619 local tax districts, from the Local Tax Enabling Act, the state law behind them, and from the cities’ own tax pages.

What comes out of a Pennsylvania paycheck: Federal income tax (Your W-4 and the IRS tables); Social Security and Medicare (6.2% and 1.45%); Pennsylvania (3.07% income tax, 0.07% UC); Local earned income tax (The higher of home and work rate); Local services tax (Up to $52 a year where you work); Deductions (401(k), health, HSA, Roth). What is left is take-home pay.

Which local earned income tax rate do I pay?

You pay the higher of your home’s total resident rate and your work place’s non-resident rate. DCED says: “An individual employee’s local Earned Income Tax (EIT) Rate is determined by comparing the employee’s ‘Total Resident EIT Rate’ (for the municipality in which the employee lives) to the ‘Work Location Non-Resident EIT Rate’ (for the municipality in which the employee works). The applicable EIT rate owed and to be withheld is always the higher of the two rates” (DCED, Local Withholding Tax FAQs). This is the rule of Act 32 of 2008, which DCED’s manual puts as “the greater of the employee’s resident tax or the employee’s nonresident tax” (DCED's Act 32 manual). So if you work in the municipality you live in, you are not a non-resident of it, and its resident rate is the one that applies, even in the rare place whose non-resident rate is higher (Pennsbury Township in Chester County: 0.312% for residents, 1% for non-residents).

Your home’s resident rate is two rates added together: your municipality’s and your school district’s. The non-resident rate is your work town’s alone, because school districts may not tax people who live outside them. DCED’s procedure manual says that “School Districts are not allowed to levy a nonresident earned income tax,” and that municipalities may generally charge non-residents no more than 1%, with exceptions for towns in financial distress.

DCED’s Act 32 FAQ gives two examples. Live where the total resident rate is 0.5% and work where the non-resident rate is 1.0%, and 1.0% is withheld. Live where it is 1.6% and work where it is 1.3%, and 1.6% is withheld. Choose your two towns here to see which rate applies to you:

Two worked paychecks show the rule at work. Lower Merion Township charges no earned income tax at all, but Newville Borough charges non-residents 2.5%, so a Lower Merion resident who works in Newville pays Newville’s rate:

Take someone single paid $55,000 a year, every two weeks, living in Lower Merion Township and working in Newville Borough. Each paycheck is $2,115.38 before anything is taken out. Out of it come federal income tax $170.00, Social Security $131.15, Medicare $30.67, Pennsylvania income tax $64.94, the state unemployment tax $1.48, the local earned income tax (2.5%) $52.88 and the local services tax $2.00. That leaves $1,662.26 a paycheck, $43,218.76 over the year: 78.6% of the pay.

A resident of Pittsburgh in the Pittsburgh School District pays 3% wherever they work in Pennsylvania outside Philadelphia, because no other town’s non-resident rate is higher:

Take someone single paid $72,000 a year, every two weeks, living and working in the city of Pittsburgh. Each paycheck is $2,769.23 before anything is taken out. Out of it come federal income tax $269.62, Social Security $171.69, Medicare $40.15, Pennsylvania income tax $85.02, the state unemployment tax $1.94, the local earned income tax (3%) $83.08 and the local services tax $2.00. That leaves $2,115.73 a paycheck, $55,008.98 over the year: 76.4% of the pay.

In DCED’s register, 1,813 of the 2,619 municipality and school district pairs have a total resident rate of exactly 1%, nearly all of them 0.5% for the municipality plus 0.5% for the school district. 75 pairs charge residents no earned income tax at all. Non-resident rates are 1% in 1,602 pairs, 0.5% in 359 and 0% in 641.

Earned income tax (EIT): A local tax on wages and other earned income, levied by Pennsylvania municipalities and school districts and withheld by employers. In Philadelphia the same kind of tax is called the Wage Tax when it is withheld, and the Earnings Tax when you pay it yourself.
Resident rate: The total earned income tax rate where you live: the municipality’s rate plus the school district’s rate.
Non-resident rate: The rate a municipality charges people who work there but live somewhere else. Many municipalities charge none; most of the rest charge 1%.
PSD code: A six-digit political subdivision code that names a municipality and its school district. Employers use it to send each employee’s local tax to the right place.
Act 32: The 2008 state law under which earned income tax outside Philadelphia is collected by county tax collection districts, and employers withhold the higher of the resident and non-resident rates.
Residency Certification Form: The form a new employee fills in, and fills in again after a move, so the employer knows the PSD codes of home and work.
Local services tax (LST): A flat yearly tax of up to $52 on people who work in a municipality that levies it, more in Harrisburg and Scranton, taken in equal parts from each paycheck when it is over $10.
Tax collection district: One of the county-based districts that collect earned income tax under Act 32, each with a tax officer that employers pay the tax to.
Sterling Act: The state law under which Philadelphia levies its own wage tax. Philadelphia is outside Act 32.

What is a PSD code, and how do I find mine?

A PSD code is the six-digit number that tells employers and collectors exactly where you live and work. DCED: “PSD (political subdivision) codes are six-digit numbers that uniquely identify each municipality in Pennsylvania.” A municipality that lies in two school districts has two codes, and the rates can differ. Pittsburgh is one: code 700102 is the part in the Pittsburgh School District (3% resident rate) and code 730105 is the part in the Baldwin-Whitehall School District (1.5%).

To find yours, type your street address into DCED’s Address Search. It shows the PSD code, the rates and the tax collector for that address. You can also look up any municipality by name in our local tax rate finder, which lists every code in DCED’s register.

Your employer asks for these codes on the Residency Certification Form. The Local Tax Enabling Act says that “an employer shall require each new employee to complete a certificate of residency form,” and that anyone who moves must fill in a new one. The form records your resident PSD code and total resident rate, and your work location’s PSD code and non-resident rate. If you moved and did not tell your employer, the wrong rate may be coming out of your pay. See DCED's page for employers.

What if I live or work outside Pennsylvania?

If you live in another state and work in Pennsylvania, you pay your work place’s non-resident rate. DCED: “For an employee who lives out-of-state, the ‘Resident PSD Code’ will be 880000, and the ‘Total Resident EIT Rate’ will be 0%. The out-of-state resident employee will still be subject to and owe the ‘Work Location Non-Resident EIT Rate,’ as well as the Local Services Tax (LST), based on the PA worksite municipality.”

If you live in Pennsylvania and work in another state for an employer there, that employer does not have to withhold anything for your Pennsylvania town, but you still owe your home’s resident rate. DCED says such employers “may withhold the ‘Total Resident EIT Rate’ as a courtesy”; if they don’t, you make quarterly estimated payments to your home tax collector yourself. For work outside Pennsylvania, DCED adds, “The LST does not apply.”

I work from home. Which town is my work place?

Your home. DCED lists “residences of home-based employees” among business worksites, next to factories, offices and warehouses (DCED, Local Income Tax Requirements for Employers). So if you work from home in Pennsylvania, your work location and your home are the same place. You pay your home’s total resident rate (a town’s non-resident rate is for people who live somewhere else), and your home town’s local services tax, if it charges one. Philadelphia is the exception: if your employer is in the city and working from home is your own choice, the city still taxes your pay, as the Philadelphia wage tax explains.

DCED does not define a “remote worker” beyond this, and we found no official answer for an employer based outside Pennsylvania whose employee works from a home in the state. If that is you, ask your home tax collector.

If you work in several Pennsylvania towns, DCED’s manual says the employer “shall establish the employee’s nonresident rate based on the PSD assigned to the employee’s liability for the Local Services Tax.” For temporary assignments, the law sets a 90-day line: for work at a job location for “less than 90 consecutive days,” the employer uses its permanent home office’s location; for “90 or more consecutive days,” it uses the job location.

What is the local services tax?

The local services tax, or LST, is a flat yearly tax on people who work in a municipality that charges it. The law caps it: “The local services tax shall be no more than fifty-two dollars ($52) on each person for each calendar year, irrespective of the number of political subdivisions within which a person may be employed.” It goes by where you work, not where you live. It is often split: $47 for the municipality and $5 for the school district. DCED explains why: when the tax took its present form in 2007, a school district that already had the older version could keep a share of no more than $5 once its municipality charged the tax, and a school district that had none could not start one.

Two cities charge more. In DCED’s register, Scranton and Harrisburg both charge $156 ($151 for the city and $5 for the school district). Scranton’s exemption line is $15,600; Harrisburg’s is $24,500.

When the yearly amount is over $10, your employer must split it across your paychecks and round each part down to the cent. DCED’s Local Services Tax page gives the examples: “a $52 tax would be collected at $1 per week for taxpayers paid weekly, or at $4.33 per month for taxpayers paid monthly.” It follows from the same rule that pay every two weeks loses $2.00 a paycheck, and pay twice a month loses $2.16, which comes to $51.84 for the year, 16 cents short of $52. When the yearly amount is $10 or less, DCED says it “may be withheld all at once from the first paycheck of the year.”

In DCED’s register, 1,323 pairs charge exactly $52, 507 charge $10, and 684 charge nothing.

Who doesn’t have to pay the local services tax?

People who earn less than $12,000 a year in the municipality, if it charges more than $10. The law says each municipality charging more than $10 “shall … exempt any person from the local services tax whose total earned income and net profits from all sources within the political subdivision is less than twelve thousand dollars ($12,000).” A school district that charges its own part may set a different line: DCED says it “can be anywhere from $0 to $11,999.”

The exemption is not automatic. You file an exemption certificate with your employer and the municipality, with your last pay stubs or W-2 from that work place attached. If your pay there later reaches $12,000, your employer starts again, taking a catch-up sum for the tax not withheld plus the regular amount, and the regular amount after that. The law says employers are not responsible for “monitoring tax exemption eligibility.” Overpaid tax can be refunded, but only amounts over $1.

Two groups are exempt by law: reservists called to active duty during the year, and honorably discharged veterans who, as a result of military service, are blind, paraplegic or a double or quadruple amputee, or have a service-connected disability rated 100% and permanent.

If you have two jobs, you pay the local services tax once. Only one municipality can collect it in a payroll period. The law sets the order: “first, the political subdivision in which a person maintains the person’s principal office or is principally employed; second, the political subdivision in which the person resides and works, if the tax is levied by that political subdivision; and third, the political subdivision in which a person is employed and which imposes the tax nearest in miles to the person’s home.” To stop a second employer from withholding it, give that employer a recent pay statement from your main employer and a statement that it is your main job.

How do Pittsburgh’s local taxes work?

Pittsburgh residents in the Pittsburgh School District pay 3%: 1% for the city and 2% for the school district. The city says that all residents “must have three (3%) percent of their wages withheld from their pay as Earned Income Tax,” and that “this applies whether the employer is located within or outside the City of Pittsburgh” (City of Pittsburgh, Taxes). Residents of the part of the city in the Baldwin-Whitehall School District pay 1.5%.

People who work in Pittsburgh and live elsewhere face a 1% non-resident rate, so under Act 32 they pay 1% or their home’s resident rate, whichever is higher. Everyone who works in the city pays its $52 local services tax, unless exempt. The city’s 0.55% payroll expense tax is paid by employers on their payroll; it is not taken out of your pay.

Which Pennsylvania towns have the highest local tax rates?

The highest total resident rates in DCED’s register are Chester City at 3.75%, Philadelphia at 3.735%, Reading at 3.6% and Scranton at 3.4%. Newville Borough follows at 3.15%, then Pittsburgh’s Pittsburgh School District part, Mount Oliver Borough and Wilkes-Barre City at 3%, Warren City at 2.8% and Pittston City at 2.7%. The Bald Eagle Area School District in Centre County charges 2.05% on its own, the highest school district rate in the state, so its twelve municipalities pay 2.55%.

A few towns charge non-residents more than 1%. Philadelphia charges 3.425%, Newville 2.5%, Chester City 2%, Erie 1.65%, Beaver Falls and Hazleton 1.5%, Altoona 1.4%, Allentown 1.28%, New Castle 1.271%, York 1.25% and Aliquippa 1.2%. If you live in a 1% town and work in Erie, for example, Erie’s 1.65% is withheld, because it is the higher of the two.

What changed in 2026?

Earned income tax rates can change on January 1 and July 1, after DCED publishes its official registers on December 15 and June 15; local services tax changes start on January 1. Comparing DCED’s 2025 register with today’s shows, among others:

From January 1, 2026: Upper Darby Township started an earned income tax of 1% for residents and non-residents, from 0%. Middletown Township in Bucks County went from 0.5% to 1%, and Narberth Borough from 0.75% to 1%.
Also from January 1: Bethel Park’s total resident rate went from 1.5% to 1.75%, Kingston Township’s from 1.55% to 1.84%, and Pittston City’s from 2.2% to 2.7%.
Several townships started charging the $52 local services tax, including Dickinson Township in Cumberland County and Warrington Township in York County.
From July 1, 2026: Collingdale Borough, Springfield Township in Delaware County and Liberty Township in Susquehanna County started a 1% earned income tax, and Philadelphia lowered its Wage Tax.

The next official register is due on December 15, 2026, for rates that start on January 1, 2027.

Where are local tax credits claimed?

On the annual local earned income tax return filed with your home tax collector. That is where Philadelphia Wage Tax, or a local income tax paid in another state, counts against your home town’s tax. DCED’s return instructions say that “no credit for income taxes paid to another state or political subdivision may exceed your total local earned income tax liability.” If you work outside Pennsylvania for an employer that withheld nothing, you pay your home tax yourself, in quarterly estimated payments. Your collector can tell you which returns you must file.

Questions people ask

Is the local earned income tax the same as Pennsylvania income tax?

No. Pennsylvania’s income tax is a state tax of 3.07% for everyone. The local earned income tax is charged by your municipality and school district on top of it, and the rate depends on where you live and work.

Is my 401(k) taxed by the local earned income tax?

Yes. DCED’s annual return instructions list “Employee Contributions to Retirement Accounts” as taxable and “Cafeteria Plans” as not taxable. So 401(k) savings do not lower your local tax, while pre-tax health premiums do.

Do school districts tax people who only work there?

No. School districts may not charge a non-resident earned income tax. The school district part of the tax is paid only by people who live in the district.

Is active-duty military pay subject to the local earned income tax?

The law says no: since 2016 the Local Tax Enabling Act leaves out “wages or compensation paid to individuals on active military service.” An older DCED FAQ still says active-duty pay is taxable. The two official sources disagree, and the law is what counts.

Where do I find my town’s rates?

Type your address into DCED’s Address Search, or look up your municipality by name in our local tax rate finder. Then put both towns into the paycheck calculator to see what comes out of your pay.