2021 Pennsylvania Payroll Tax Rates

Abacus Payroll presents an updated summary of all changes to Pennsylvania payroll tax rates in 2021.

Pennsylvania Income Tax Rate

The withholding rate for 2021 remains at 3.07%.

Pennsylvania Unemployment Tax

The employee rate for 2021 remains at 0.06%. 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, 2020 tax rates are 3.8712% for Philadelphia residents and 3.5019% for nonresidents. These rates are adjusted by the City of Philadelphia on July 1 of each year.

2020 Pennsylvania 1099-MISC 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 February 1, 2021 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.