Everything you need to know about payroll taxes in Pennsylvania
Did you know that Pennsylvania imposes a flat personal income tax rate of 3.07%, one of the lowest in the nation? While this rate simplifies state tax calculations, navigating the full spectrum of payroll taxes in Pennsylvania requires careful attention. From local tax withholdings to unemployment insurance contributions, understanding these obligations is crucial for maintaining compliance and ensuring your business operates smoothly.
In this blog, we will discuss everything about Pennsylvania payroll taxes, breaking down everything you need to know—from calculating withholdings and paying unemployment insurance to navigating submission processes and understanding the consequences of non-compliance. We will also explore how Global Squirrels can help streamline your payroll taxes in Pennsylvania, ensuring your business remains compliant with all regulations. Whether you are a seasoned business owner or a startup founder, read on to demystify Pennsylvania payroll taxes and gain the confidence you need to manage it effectively.
What is the purpose of payroll taxes?
Payroll taxes are levies imposed on you and your employees, calculated as a percentage of their salaries. These taxes are typically deducted from employees’ wages and remitted to the government by your business. You are also responsible for paying federal and state unemployment taxes. It is important to note that payroll taxes differ from income taxes; while payroll taxes fund specific social programs, income taxes contribute to the government’s general revenue.
The purpose of payroll taxes is to fund essential government programs that provide financial security and benefits to workers and the general public. These taxes are deducted from employees’ wages and matched by your business.
- Social security & medicare (FICA Taxes) – Fund retirement, disability, and healthcare benefits for eligible individuals under the Social Security and Medicare programs.
- Unemployment Insurance (UI) – Provides temporary financial support to workers who lose their jobs through no fault of their own.
- Workers’ compensation fund – Helps cover medical expenses and lost wages for employees who suffer job-related injuries or illnesses (varies by state).
- Federal & state income tax withholding – Supports government operations, public infrastructure, education, and other essential services.
Simplify payroll taxes with Global Squirrels
Managing payroll taxes in Pennsylvania is easy with our staffing platform. Automate payroll, ensure compliance, and avoid errors through our secure, user-friendly platform.
Request a demoPaying unemployment insurance
In Pennsylvania, paying unemployment insurance (UI) is a shared responsibility between your business and the state, ensuring financial support for workers who lose their jobs through no fault. You must register with the Pennsylvania Department of Labor & Industry, maintain accurate payroll records, and pay quarterly UC taxes via the Unemployment Compensation Management System (UCMS).
If you fail to comply, penalties or higher tax rates may apply. Claimants receive benefits through direct deposit or a prepaid debit card, with payments managed by the Pennsylvania Treasury’s Bureau of Unemployment Compensation Disbursement (BUCD).
Just like Pennsylvania has its own UI tax structure, your business operating in multiple states, for instance, Texas, must also consider the differences in payroll taxes, where unemployment insurance tax rates and requirements vary. Check out our blog to learn all about payroll tax requirements in Texas.
How to submit payroll taxes in Pennsylvania?
In Pennsylvania, you are responsible for withholding and remitting various payroll taxes at the state and local levels. Here’s a concise guide to help you navigate the process.
1. State withholding tax:
- Registration: You must register with the Pennsylvania Department of Revenue to obtain a Withholding Tax Account ID. You can do this through the myPATH portal.
- Withholding: You must withhold personal income tax from employees’ compensation, regardless of where the services are performed.
- Filing and payment frequencies: The frequency of filing and remitting withheld taxes depends on the total amount withheld per quarter. You can check the due dates for paying payroll taxes in Pennsylvania in the next section.
- Annual reconciliation: Your business must file the Annual Withholding Reconciliation Statement (Form REV-1667) and provide W-2 forms to employees by January 31.
2. Local Earned Income Tax (EIT) and Local Services Tax (LST)
- Registration: You should determine the appropriate local tax collector based on their work site locations. Tools like the Address Search Application can assist in identifying the correct tax collector.
- Withholding: You must withhold the applicable EIT and LST from employees’ wages.
- Filing and payment: Quarterly filings and remittances are typically due within 30 days after the end of each calendar quarter. Many local tax collectors offer online filing options.
3. Unemployment Compensation (UC) tax
- Registration: Your business must register with the Pennsylvania Department of Labor & Industry to obtain a UC account number.
- Contributions: You are also responsible for paying UC taxes based on a specific rate applied to each employee’s taxable wages.
- Filing and payment: Quarterly UC reports and payments are submitted through the Unemployment Compensation Management System (UCMS).
What are the due dates for paying payroll taxes in Pennsylvania?
In Pennsylvania, the due dates for paying payroll taxes depend on the total amount withheld per quarter.
- Quarterly filing: If your total withholding is under $300 per quarter, payments are due on the last day of April, July, October, and January.
- Monthly filing: For withholdings between $300 and $999 per quarter, payments are due by the 15th day of the following month.
- Semi-monthly filing: If withholdings are between $1,000 and $4,999.99 per quarter, payments are due within three banking days after the close of each semi-monthly period.
- Semi-weekly filing: For withholdings of $5,000 or more per quarter, payments are due as follows:
- For paydays on Wednesday, Thursday, or Friday, payment is due the following Wednesday.
- For paydays on Saturday, Sunday, Monday, or Tuesday, payment is due the following Friday.
You should also file reconciliation returns for each quarter and submit wage and tax statements (W-2s) for all employees. These filings can be managed through the Pennsylvania Department of Revenue’s online portal, myPATH.
For a detailed schedule of specific due dates, refer to the 2025 filing and remittance due dates document provided by the Pennsylvania Department of Revenue. It is important to note that filing frequencies and due dates can vary based on the amount of withholding.
Consequences of not complying with payroll taxes in Pennsylvania
Non-compliance with payroll tax obligations in Pennsylvania can result in significant financial and legal repercussions for your business. Failure to withhold or report payroll taxes in Pennsylvania accurately and on time may lead to penalties, interest charges, and potential audits by the Pennsylvania Department of Revenue.
Late filing will lead to a 5% penalty per month, up to 25% of the unpaid tax, while underpayments attract daily interest charges until resolved. Submitting payments incorrectly or failing to use Electronic Funds Transfer (EFT) for amounts exceeding $1,000 may incur additional fines.
Furthermore, false or fraudulent returns can trigger a 50% penalty on the under reported amount and potential criminal prosecution. While these are governed by specific state laws, if you operate across state lines, such as in Florida, you must be aware of the differences. For instance, the payroll taxes in Florida primarily include federal obligations due to the state’s lack of a personal income tax.
How can Global Squirrels help you comply with Pennsylvania payroll taxes?
Global Squirrels is your trusted partner in staffing and payroll management, offering innovative solutions to help you hire and manage professionals who perfectly align with your business needs. Our Purple plan is specifically designed to streamline payroll and HR-related tasks, enabling you to focus on growth while simplifying the complexities of payroll processing and compliance.
With the Purple plan, our platform ensures full adherence to Pennsylvania payroll tax laws and labor regulations, reducing the risk of non-compliance, penalties, and legal issues. Our platform handles everything from accurate salary calculations and statutory deductions to ensuring compliance with state and federal employment regulations. Our automated payroll system processes salaries with precision, calculates taxes in accordance with Pennsylvania’s payroll taxes, and guarantees timely statutory payments.
Beyond payroll, our platform helps safeguard your business by mitigating risks associated with employee misclassification, keeping you audit-ready. Our automated payroll processing system eliminates manual errors, offering a secure, user-friendly dashboard to manage all payroll tasks effortlessly. Additionally, our platform streamlines attendance tracking and timesheet approvals, ensuring compliance with Pennsylvania labor laws and company-specific policies.
Our platform offers solutions to ensure you get what you deserve.
Getting started with the Purple Plan is simple. You can onboard candidates you have already sourced or convert a freelancer into a full-time employee in just a few steps. Simply sign up or log in to our platform, choose the Purple Plan, and enter the required details like the candidate’s full name, email address, job title, job responsibilities, start date, and necessary onboarding documents. From there, our platform takes over, managing the entire onboarding process along with all HR and payroll functions.
Let Global Squirrels simplify your payroll process—so you can focus on what matters most: growing your business. Sign up today and experience hassle-free payroll tax management in Pennsylvania!
