Act 32 - Local Earned Income Tax

What is Act 32?

Act 32 is a law that reforms and standardizes the local earned income tax system. The appointment of collection responsibility falls on countywide committees made up of representatives from local municipalities and school districts. The committees established tax collection districts and elected tax officers to collect the Earned Income Tax (EIT).

Act 32 requires uniform withholding of earned income taxes and remittance to a single local collector or Tax Officer. The Act applies to the earned income taxes levied and collected after December 31, 2011.

Employers must begin to withhold the local EIT from employees on January 1, 2012. Appointed tax officers start collecting the EIT on January 1, 2012, unless the tax collection district has opted for early implementation.

Important Resources

Click here for All Act 32 Forms, Regulations, Tax Collector/Officer Information and other resources to aid you in your process.

How do I find EIT rates and PSD Codes?

To determine EIT rates, PSD Codes, and tax collector/officer contact information, use the Address Search. 

DO's and DON'Ts of the Address Search Application:

• DO use Microsoft Internet Explorer: System requirements are Microsoft Internet Explorer 6.0 or later: Pop-Up Blocker must be disabled.
• DO NOT enter P. O. Boxes or Rural Route Addresses: These will not work in the application.
• DO remember that all addresses may not be in the system: If your address doesn’t show up, FOLLOW the instructions noted at the bottom of the “Find Your Withholding Rates by Address” page. You must contact the Tax Collector/Officer to determine local tax rates and PSD Codes.
• DO remember that if you Live or Work out of state: Enter the PA address in both the work and home address fields.  On the Residency Certificate Form enter only the relevant information for the PA address.  For the out-of-state address enter the PSD code 880000 and the EIT rate 0.

How should employers withhold local EIT from employees who travel from site to site on a regular basis and do not maintain a place of employment in the areas where they work?
 

1.    If an employee is working temporarily at a PA facility for a period of time that encompasses a “reporting quarter”, then the facility site would be thework location address used to determine the EIT rate and corresponding PSD code in the Address Search.

2.    If an individual works for an employer who has a central business location in PA, but the employee “floats” or is transferred daily, weekly or monthly between other business sites, then the central or main employer business location would be the work location address to determine the EIT rate and corresponding PSD code in the Address Search.

3.    If an employee is hired by an employer and receives work orders or instructions at home in PA but physically reports to other business sites on a daily, weekly or monthly basis, then the employee’s home address should be used as both the home and work location  address used to determine the EIT rates and corresponding PSD codes in the Address Search.