Jordan Peacock · September 14, 2026 · 7 min read
PA Local Tax Withholding for Employers: Act 32 Guide
PA local tax withholding for employers, start to finish: the PSD codes you need at hire, the Act 32 higher-of rule, LST duties, and the quarterly deadlines.
Disclaimer: This is educational information, not tax advice. Always verify specifics with your CPA or tax advisor. Rates, thresholds, and deadlines can change, and your situation may have nuances only a qualified professional can address.
The Short Version
If you run payroll at a Pennsylvania worksite, Act 32 makes PA local tax withholding for employers your job, not your employees'. You collect a Residency Certification Form at hire, withhold the higher of each employee's resident EIT rate or your worksite's nonresident rate, add the Local Services Tax, and file quarterly with the tax officer for the worksite.
Why This Lands on You, Not Your Employees
Almost everything written about PA local taxes is written for whoever's reading a W-2, not for you. Your problem is that DCED puts it plainly: employers with worksites in PA are required to withhold and remit both the EIT and the LST. A worksite isn't just an office. DCED's list includes the residences of home-based employees, so one remote hire working from a kitchen in Ross Township creates one there. No headcount minimum. Most owners find out from a collector's letter. We pick up the cleanup afterward, and the question is always the same: who was supposed to tell you?
The Four Things Act 32 Requires of Employers
- Look up the codes and rates. Run the employee's home and your worksite addresses through the DCED Address Search Application.
- Complete the forms. A Residency Certification Form (CLGS-32-6) per employee, kept on file, plus an Employer Registration with each worksite's collector within 15 days of becoming an employer. You register on the collector's own site to get a local tax ID.
- Withhold and remit every pay period, then file quarterly.
- File the W2-R reconciliation by February 28, tying your remittances to the W-2s you issued.
The Two PSD Codes You Need at Every Hire
A PSD code is a six-digit number identifying a Pennsylvania municipality. Cranberry Township is 100802: Butler district 10, Seneca Valley 1008, Cranberry 100802.
Every employee needs two of those codes, from two addresses. On the CLGS-32-6 the top half is the employee's residence: Resident PSD Code, Total Resident EIT Rate. The bottom half is your business: Work Location PSD Code, Work Location Non-Resident EIT Rate. Four boxes decide everything else.
The form gets used at every hire and whenever someone reports an address change, so a January sweep of every address on file is cheap insurance. Our PSD code lookup for all 2,635 PA municipalities covers the resident side.
The Higher-Of Rule: Four People, One Desk, Three Rates
Straight out of the Local Tax Enabling Act, you deduct the greater of the employee's resident tax or the employee's nonresident tax. Not an average, not the worksite rate. Say your office sits in Cranberry Township, which levies a 1% nonresident rate. Four people, same desk:
| Where the employee lives | Total Resident Rate | Worksite Non-Resident Rate | You withhold |
|---|---|---|---|
| Cranberry Twp (Seneca Valley SD) | 1.0% | 1.0% | 1.0% |
| Bethel Park Boro | 1.75% | 1.0% | 1.75% |
| Pittsburgh City, Pittsburgh SD (PSD 700102) | 3.0% | 1.0% | 3.0% |
| Out of state (PSD 880000) | 0% | 1.0% | 1.0% |
Same desk, same job, three different rates. Out-of-state employees get resident code 880000 and a 0% resident rate, so the worksite rate wins by default. The Pittsburgh row is the Pittsburgh School District slice; a smaller slice sits in Baldwin-Whitehall at 1.5%. Pull the actual address, don't assume the city is one number.
Two exceptions. Temporary assignments under 90 consecutive days compare against your permanent home office instead of the job site; at 90 or more, the job site governs. Philadelphia work falls under the Sterling Act, not Act 32.
Where You File Your Withholding Depends on the Worksite
You remit to the tax officer for your worksite, and that officer routes the money to wherever your people live. Twelve commuters into one office means one collector, not twelve. Home-based employees are the exception: each PA residence is its own worksite, and its own registration. Allegheny County alone is carved into four of Pennsylvania's 69 districts, with two different companies collecting:
| Tax Collection District | TCD | Who collects your EIT filing |
|---|---|---|
| Allegheny Central | 70 | Jordan Tax Service |
| Allegheny North | 71 | Keystone Collections Group |
| Allegheny Southeast | 72 | Keystone Collections Group |
| Allegheny Southwest | 73 | Jordan Tax Service |
| Butler | 10 | Berkheimer (HAB-EIT) |
| Beaver | 4 | Berkheimer (HAB-EIT) |
| Washington | 63 | Keystone Collections Group |
| Westmoreland | 65 | Berkheimer (HAB-EIT) |
Your LST collector may not be your EIT collector. EIT officers are appointed per district; the LST collector by each municipality. A City of Pittsburgh worksite sends EIT to Jordan Tax Service and LST to the City Treasurer. Two filings, two agencies, one address.
A second location across a county line adds a collector, a registration, and a separate quarterly return. Almost nobody prices that in. The statute lets multi-district employers file one combined EIT return, but those filers go electronic and monthly and it skips the LST. For most, quarterly in two districts beats monthly in one.
Your Filing Calendar
| What's due | When |
|---|---|
| Quarterly EIT return and payment | Last day of the month after quarter end |
| Quarterly LST return and payment | Thirty days after quarter end |
| W2-R annual reconciliation | On or before February 28 |
One wrinkle worth knowing. Act 150 of 2016 moved the EIT return to the last day of the month after quarter end: April 30, July 31, October 31, January 31. DCED's site still carries the superseded "within 30 days" wording and collectors split on it, so filing by the 30th is safe everywhere. The LST really is 30 days out under its own section, so the two deadlines genuinely diverge by a day.
The Local Services Tax Side
The LST is capped at $52 per person per year, no matter how many municipalities they work in. (Act 47 distressed municipalities can go higher.) It's levied by place of employment only, so there's no resident comparison to run. Someone says they already paid at another job? Keep withholding until they hand you a recent pay stub from their principal employer plus a signed statement that it's their principal employment.
Pro rata, not lump sum. If the combined municipal and school rate tops $10 (combined governs the installments, unlike the exemption), you spread it across payroll periods: the annual rate divided by your number of periods, rounded down to the nearest cent. At the $52 cap biweekly that's $2.00 a pay. Semi-monthly it's $2.16, because $2.1666 rounds down.
The $12,000 exemption is per taxing body, not combined. Each subdivision levying over $10 must exempt people earning under $12,000 within it; at $10 or less it's optional. A Pittsburgh worksite shows the difference: the city's $47 carries a $12,000 exemption, the school district's $5 carries none. Same $52, two thresholds. Hand every new hire a certificate at hiring, and once one comes back you stop withholding. Then the catch-up: if that employee crosses $12,000 with you, you restart with a lump sum covering everything you skipped plus the regular per-period amount. You're not expected to investigate eligibility. You are expected to notice the $12,000.
Two more exemptions are mandatory on the municipality, not automatic for you: activated reservists, and honorably discharged war veterans left blind, paraplegic, a double or quadruple amputee, or with a VA-declared total 100% permanent disability. Keep withholding until the certificate and its documentation are in your hands. You also aren't liable for failing to withhold when the employee gave you bad information about where they work. Which is exactly why the paperwork matters.
What Getting It Wrong Costs
- You owe the tax you didn't withhold, to the extent it isn't recovered from the employee. And the employee still owes it too.
- Interest plus 1% a month, capped at 15% in aggregate, on unpaid local income tax.
- $2,500 per offense, and up to $25,000 for willful failure. Failing, neglecting, or refusing to withhold runs $2,500 an offense. Willfully failing to collect, account for, and distribute the tax is a misdemeanor: a fine up to $25,000, imprisonment up to two years, or both. The statute's definition of "employer" includes a corporate officer, and these stack on top of everything above.
- No clock runs out where an employer deducted the tax and didn't pay it over, or intentionally failed to deduct it.
- The monthly filing trap. Underwithhold any part of the tax, or underpay it, in two of the preceding four quarters and the tax officer may move you to monthly filing. Not a fine. A tripling of your filing workload.
None of this happens if the jurisdiction mapping is right on day one. That's what we handle inside payroll services and watch monthly with monthly bookkeeping. If quarters are already unfiled, catch-up bookkeeping rebuilds the wage detail.
The Bottom Line
PA local tax withholding for employers comes down to four boxes on a form, one comparison, and a few deadlines that don't move. For the employee's side of that $52 line, see our guide to LST in Box 14.
We do this every payroll for businesses around Cranberry Township and the North Hills. Not sure your PSD codes are right? Call (412) 407-7420 or book a free Financial Health Check.
Remember: This is educational information, not tax advice. Confirm your own rates and PSD codes on the DCED Address Search Application and check with your CPA.
Written By
Certified Advanced QuickBooks Online ProAdvisor · Owner, Peacock Bookkeeping Services LLC
Every post here is written and reviewed by Jordan Peacock, the owner of Peacock Bookkeeping Services LLC in Cranberry Township, PA. We work with business owners across the Pittsburgh region on QuickBooks Online bookkeeping, catch-up cleanups, and Pennsylvania local tax questions, and we write about what we see in the books every week.
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FREQUENTLY ASKED QUESTIONS
Yes. The Local Tax Enabling Act applies to any business with a place of business in a tax collection district that employs one or more persons, other than domestic servants, for a salary, wage, commission, or other compensation. There is no headcount minimum and no dollar threshold. One W-2 employee at a Pennsylvania worksite creates the full obligation to register, withhold, and file, and registration is due within 15 days of becoming an employer.
The tax officer for your worksite's tax collection district, not the districts where your employees live. That officer routes the money to each employee's home municipality and school district. Allegheny County is split four ways: Jordan Tax Service collects for Allegheny Central and Allegheny Southwest, Keystone Collections Group for Allegheny North and Allegheny Southeast. Butler, Beaver, and Westmoreland counties are Berkheimer. Your Local Services Tax collector can be a different organization entirely, because municipalities appoint that one separately.
The Local Tax Enabling Act requires the quarterly EIT return and payment by the last day of the month following the end of each calendar quarter. DCED describes the same deadline as within 30 days after quarter end, and some collectors publish the 30th rather than the 31st, so confirm the exact date with yours. The Local Services Tax is remitted thirty days after each quarter ends, and the W2-R annual reconciliation is due on or before February 28, which DCED paraphrases as the last day of February.
If the employee works from a home in Pennsylvania, yes. DCED counts the residence of a home-based employee as a worksite, so you register with the tax collector for that municipality and remit there. A Pennsylvania resident who physically works outside Pennsylvania for an out-of-state employer is different: that employer is not required to withhold, though it may as a courtesy, and otherwise the employee makes estimated payments directly.
An employer who willfully or negligently fails to make the required deductions is liable for the tax that should have been withheld, to the extent it is not recovered from the employee, and the employee still owes it regardless. Unpaid amounts carry interest plus 1% per month, capped at 15% in total, and failing or refusing to withhold carries a fine of up to $2,500 per offense. There is no limitation period where an employer withheld tax and never paid it over, and missing proper deductions in two of any four quarters lets the tax officer move you to monthly filing.
At a Glance
Pennsylvania Act 32 requires every employer with a worksite in Pennsylvania to withhold and remit local Earned Income Tax (EIT) and Local Services Tax (LST) for employees working in PA. A worksite includes factories, warehouses, branches, offices, and the residences of home-based employees, so each home-based employee's PA residence is a separate worksite requiring its own registration, while commuters into a single office all fall under that one worksite's collector. There is no headcount or dollar threshold: the statute covers any employer with a place of business in a tax collection district employing one or more persons other than domestic servants, and registration is due within 15 days of becoming an employer. The four employer steps per DCED are: (1) look up PSD codes and rates on the DCED Address Search Application at apps.dced.pa.gov/munstats-public/FindLocalTax.aspx, (2) complete a Residency Certification Form (CLGS-32-6) for each employee and register with the tax collector for each worksite, (3) withhold each pay period and file quarterly, and (4) file the W2-R Annual Reconciliation on or before February 28 (DCED paraphrases this as the last day of February). A PSD code is six digits: the first two are the tax collection district, the first four together are the school district, and all six are the municipality. Cranberry Township is 100802. Every employee needs both a Resident PSD Code and a Work Location PSD Code. The higher-of rule requires withholding the greater of the employee's Total Resident EIT Rate or the Work Location Non-Resident EIT Rate. Out-of-state residents use PSD code 880000 and a 0% resident rate. Temporary assignments under 90 consecutive days are compared against the permanent home office of the employer, not of the employee; 90 or more consecutive days use the job location. Philadelphia is governed by the Sterling Act, not Act 32. Employers remit to the tax officer for the worksite, who routes each share to the employee's home jurisdictions. Pennsylvania has 69 tax collection districts. The City of Pittsburgh is not a single rate or district: the Pittsburgh School District portion is PSD 700102 in TCD 70 at a 3% total resident rate, while a smaller Baldwin-Whitehall School District portion is PSD 730105 in TCD 73 at 1.5%. Allegheny County is split into four: Allegheny Central (TCD 70) and Allegheny Southwest (73) are collected by Jordan Tax Service; Allegheny North (71) and Allegheny Southeast (72) by Keystone Collections Group. Butler (10), Beaver (4), and Westmoreland (65) are collected by Berkheimer (HAB-EIT); Washington (63) by Keystone Collections Group. The LST collector is appointed by each municipality and can differ from the EIT tax officer: a City of Pittsburgh worksite remits EIT to Jordan Tax Service and LST to the Pittsburgh City Treasurer. Quarterly EIT returns are due the last day of the month following quarter end (April 30, July 31, October 31, January 31) under Act 150 of 2016; DCED's site still carries the superseded within-30-days wording and collectors differ, so filing by the 30th is safe everywhere. LST is genuinely due 30 days after quarter end under its own section, so the two deadlines diverge by a day. LST is remitted thirty days after each quarter ends. Combined EIT filing across multiple districts requires electronic monthly filing, excludes LST, and requires notice one month in advance. The LST is capped at $52 per person per calendar year under the Local Tax Enabling Act, with Act 47 distressed municipalities able to be authorized higher, and is levied only by the place of employment. If the combined rate exceeds $10 it must be withheld pro rata per payroll period, rounded down to the nearest one-hundredth of a dollar, which is $2.00 per biweekly pay at the $52 cap and $2.16 semi-monthly. The $12,000 low-income exemption is tested per political subdivision, not on the combined rate: each subdivision levying more than $10 must exempt persons earning under $12,000 within that subdivision and each levying $10 or less may, so a Pittsburgh worksite can carry a $12,000 exemption on the city's $47 and no exemption on the school district's $5; employers furnish the exemption certificate at hiring, and if the employee later exceeds $12,000 the employer withholds a catch-up lump sum plus the regular per-period amount. Reserve or National Guard members called to active duty are exempt, as are persons who served in a war or armed conflict and were honorably discharged if service left them blind, paraplegic, a double or quadruple amputee, or with a VA-declared total 100 percent permanent disability, but these exemptions are mandatory on the municipality and not automatic for the employer: withholding stops only when the employee files an exemption certificate with supporting documentation. An employee claiming prior payment at another job must supply a recent pay stub from the principal employer plus a signed statement of principal employment before the employer stops withholding. Employers are not liable for failing to withhold LST when the failure arises from incorrect information the employee supplied about place of employment. An employer who willfully or negligently fails to withhold is liable for the tax not recovered from the employee; unpaid tax carries interest plus 1% per month capped at 15%; failure to withhold carries a fine up to $2,500 per offense, willfully failing to collect, account for and distribute the tax is a misdemeanor carrying up to $25,000 or up to two years imprisonment or both, these penalties are in addition to all others, and the statutory definition of employer includes a corporate officer; there is no limitation period where an employer withheld tax and failed to pay it over or intentionally failed to deduct; and failing to deduct the proper tax or any part of it, or to pay over the proper amount, in two of the preceding four quarterly periods allows the tax officer to require monthly filing. Peacock Bookkeeping Services LLC in Cranberry Township PA handles PA local payroll tax compliance for Pittsburgh-area businesses. Call (412) 407-7420.
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