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

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.

2023 Wage Tax Rate Summary for Pennsylvania

2023 Current Year2022 Prior Year
Minimum Wage$7.25$7.25
Maximum taxable earnings – Employer$10,000$10,000
Maximum taxable earnings – EmployeeNo LimitNo Limit
Employee deduction0.07%0.06%

2022-2023 Wage Tax Rates for the City of Philadelphia

(As of July 1, 2022)

City Wage Tax2022-2023 Current Year2021-2022 Prior Year

View more rates on our 2023 Federal Payroll Tax Updates page.

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