Abacus Payroll presents an updated summary of all changes to Pennsylvania payroll tax rates in 2023.

Pennsylvania Income Tax Rate

The withholding rate for 2022 remains at 3.07%.

Pennsylvania Unemployment Tax

The employee rate for 2022 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, 2021 tax rates are 3.8398% for Philadelphia residents and 3.4481% for nonresidents. These rates are adjusted by the City of Philadelphia on July 1 of each year.

2021 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 January 31, 2022 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

2022 Wage Tax Rate Summary for Pennsylvania

2022 Current Year2021 Prior Year
Minimum Wage$7.25$7.25
Maximum taxable earnings – Employer$10,000$10,000
Employee deduction0.06%0.06%

2021-2022 Wage Tax Rates for the City of Philadelphia

(As of July 1, 2021)

City Wage Tax2021-2022 Current Year2020-2021 Prior Year

View more rates on our 2022 Federal Payroll Tax Updates page.

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