Abacus Payroll and Alloy Silverstein present an updated summary of all changes to Pennsylvania payroll tax rates in 2023.
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Pennsylvania Income Tax Rate
The withholding rate for 2023 remains at 3.07%.
Pennsylvania Unemployment Tax
The employee rate for 2023 increases to 0.07%. Wages subject to unemployment contributions for employees are unlimited. Wages subject to unemployment contributions for employers remains at $10,000.
City of Philadelphia Wage Tax
Effective July 1, 2022 tax rates are 3.79% for Philadelphia residents and 3.44% for nonresidents. These rates are adjusted by the City of Philadelphia on July 1st of each year.
Pennsylvania 1099-MISC/NEC Withholding Tax
There is a withholding requirement for payors of Pennsylvania-source non-employee compensation and business income to non-resident individuals. In addition, lessees of Pennsylvania real estate making “lease payments” to nonresident lessors in the course of a trade or business are required to withhold personal income tax on payments of $5,000 or more annually. The 1099-MISC/NEC forms will need to be filed with the Pennsylvania Department of Revenue by January 31, 2023 along with the Annual Withholding Statement (PA Form Rev-1667). Details can be found at http://revenue. pa.gov.
Pennsylvania Local Tax Rate
Act 32 is a law that reformed and standardized the local earned income tax (EIT) system, which requires uniform withholding of earned income taxes and local services tax with remittance to a single local collector or Tax Officer. For more information, see www.dced.pa.gov.
New Hire Reporting Requirements
All employers in the state of Pennsylvania are required to report basic information about employees who are newly hired, rehired, and returning to work after separation of employment or leave of absence, temporary employees, and contracted entities. Employers must report this information within 20 days at www.cwds.pa.gov. Failure to report a new employee could result in a fine up to $25 per violation.
Basic employee information which must be provided is as follows:
(1) Employee’s name
(2) Employee’s address
(3) Employee’s social security number
(4) Employee’s date of hire and birth
(5) Employer’s name and address
(6) Employer’s federal identification number
For further information contact us or call the State of Pennsylvania at 1-888-724-4737 (1-888-PA-HIRES).
2023 Wage Tax Rate Summary for Pennsylvania
|2023 Current Year||2022 Prior Year|
|Maximum taxable earnings – Employer||$10,000||$10,000|
|Maximum taxable earnings – Employee||No Limit||No Limit|
2022-2023 Wage Tax Rates for the City of Philadelphia
|2022-2023 Current Year||2021-2022 Prior Year|
|City Wage Tax|
View more rates on our Federal Payroll Tax Update page.