US State Tax for Pennsylvania

Your Ultimate Guide to US Payroll in Pennsylvania

Managing payroll in Pennsylvania? Read our state-by-state guide to US payroll taxes to learn what you must withhold and deduct from employee wages.

Jemima Owen-Jones
Written by Jemima Owen-Jones
August 1, 2023

Key takeaways

  1. Employers in Pennsylvania are responsible for paying various payroll taxes on behalf of employees, including unemployment insurance, also known as unemployment compensation.
  2. Personal income tax is another payroll tax to consider, calculated on the income of Pennsylvania employees.
  3. Workers’ compensation safeguards both employees and the employer against the repercussions of work-related injuries and illnesses.

As an employer in Pennsylvania, you are responsible for legally complying with proper payroll withholding regulations and requirements. To help you get started, this guide serves as an introduction to common payroll withholdings, such as unemployment insurance, personal income tax, and workers’ compensation. 

Paying unemployment insurance

As an employer, you may be familiar with common federal tax withholdings such as Medicare and Social Security. However, other Pennsylvania state taxes must also be withheld from your employee’s payroll. One of these employer payroll taxes is unemployment insurance (UI), commonly referred to as unemployment compensation in Pennsylvania. 

Unemployment insurance payroll withholding is a national program that provides financial assistance to eligible individuals who have lost their jobs involuntarily and are actively seeking new employment. 

Unlike most other states, Pennsylvania allows you to withhold portions of your employee’s salary as contributions to unemployment compensation. Administered by the US Department of Labor, unemployment compensation is managed through an online portal.  

More information on paying your unemployment insurance can be accessed from the Pennsylvania Office of Unemployment Compensation.

Withholding personal income tax from your Pennsylvania Employee

Personal income tax is another employer payroll tax that is calculated on the income of Pennsylvania residents. Also known as individual or state income tax, personal income tax is deducted from an employee’s wages and withheld by the employer. 

The employer is responsible for paying the withheld amount to the state, a process that can be completed through Pennsylvania’s online portal.

For more information on paying the withholding amount, the Pennsylvania Department of Revenue provides more information. 

Paying your Pennsylvania workers’ compensation

On top of paying your Pennsylvania payroll taxes, you must also pay workers’ compensation, even if you only have one Pennsylvania employee. 

Workers’ compensation is a form of insurance that provides wage replacement and medical benefits to employees who are injured or become ill on the job. The insurance is usually purchased from a qualified commercial carrier in the state. To assist, the Pennsylvania Department of Labor and Industry provides valuable information to help you find a qualified commercial carrier. 

Note: It’s important to verify that your workers’ compensation insurance complies with the state’s regulations for workers’ compensation.

Simplify US payroll tax compliance with Deel

While this guide provides essential information on Pennsylvania payroll taxes, payroll compliance, and state requirements extend beyond what is covered above. To streamline the process and ensure full compliance, companies can turn to Deel.

Deel offers a comprehensive solution for managing US and international payroll, including payments, taxes, worker classification, and more. Speak with an expert today to see how you can streamline your US payroll processes and ensure compliance with state regulations.

Disclaimer: This article is provided for general informational purposes and should not be treated as legal or tax advice. Consult a professional before proceeding.

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