2026 tax year · Pennsylvania
Local income tax in Pennsylvania
Philadelphia is the most expensive of the Pennsylvania levies we hold, $2,992 on $80,000, on top of federal and state tax.
An Earned Income Tax everywhere except Philadelphia, which runs its own wage tax and its own tax on self-employed profit. Plus a flat annual Local Services Tax based on where you work.
S-corporation profit escapes the local tax entirely, while the identical profit earned as a sole proprietor does not.
What the Pennsylvania levies cost on $80,000
| Jurisdiction | How it is worked out | On $80,000 |
|---|---|---|
| Most municipalities (Act 32 earned income tax) | 1% is the most common combined rate; the range runs to 3.8% | $800 |
| Philadelphia | 3.74% resident, 3.43% nonresident. And the rate changes on July 1, not January 1, so a calendar year blends two | $2,992 |
| Pittsburgh | 3% resident, 1% city plus 2% school, and the school share does not reach nonresidents | $2,400 |
| Local Services Tax | up to $52 a year in flat dollars, by work location, exempt below $12,000 of earned income | $52 |
Does it reach self-employment profit?
Yes. In Pennsylvania the local tax reaches net profit from self-employment, not only wages. No employer withholds it, so it is on you to pay it, usually alongside your quarterly estimates, and it is routinely missed for exactly that reason.
What catches people out in Pennsylvania
Pennsylvania runs two local tax systems that do not talk to each other. The Earned Income Tax covers the whole state except Philadelphia, which sits outside it entirely with its own wage tax and its own tax on self-employed profit.
Philadelphia changes its rates on July 1 rather than January 1, so any figure for a full calendar year is a blend of two rates rather than one.
The most valuable thing to know here if you own a business: profit that reaches you as an S-corporation shareholder is not subject to the local Earned Income Tax, while the same profit earned as a sole proprietor is. In an area charging 3% between the municipality and the school district, that is a real reason to consider the election. And it is invisible in the federal arithmetic, because federally the two are taxed much the same.
If you work for yourself, nobody withholds this tax for you. Sole proprietors, single-member LLC owners and most individual partners owe Earned Income Tax on their business profit and have to send quarterly payments directly to their local collector. It is missed constantly for exactly that reason.
The Local Services Tax is a separate flat charge in dollars rather than a percentage, based on where you work rather than where you live. It is capped at $52 a year in total however many places you work in, and anyone earning under $12,000 from work in that area is exempt. Self-employed people owe it too, and where it is more than $10 a year they pay it quarterly.
These figures were checked in July 2026 against Pennsylvania city and state revenue sources, and we rate our confidence in them as high on mechanics, medium on rate ranges. Local rates change by council vote and local referendum far more often than state rates do, so confirm yours with the city or county itself before relying on a number here.
What these words mean
- Sole proprietor
- Someone who works for themselves without forming a company. The default if you started working for yourself and never registered anything, you and the business are the same legal person for tax.
- Nonresident
- Someone who earns money in a place without living there. Most states and cities tax non-residents only on what they earned inside the boundary, and residents on everything.
- Earned income tax
- Pennsylvania’s local tax on wages and self-employed profit, collected by your municipality and school district rather than by the state.
- Local Services Tax
- A flat annual charge in Pennsylvania based on where you work rather than what you earn, capped at $52 a year across every place you work in.
- S corporation election
- Asking the tax office to treat your company as a pass-through, so profit is taxed to you rather than to the company. The owner takes a salary and the rest as a distribution, which is what saves payroll tax.
Related
- Local income tax in every state
- 1099 taxes in Pennsylvania
- Paycheck in Pennsylvania
- Quarterly payments in Pennsylvania
- S-corp election in Pennsylvania
General information about how these taxes work, not tax advice. Local rates change by ordinance and referendum, confirm with your jurisdiction or a tax professional before acting on anything here.