2023 Pennsylvania Payroll Tax Rates

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.