Pennsylvania law requires the withholding of Pennsylvania personal income tax from compensation of resident employees for services performed either within or outside Pennsylvania, and from wages of nonresident employees for services performed within Pennsylvania. Every employer paying compensation subject to withholding must withhold Pennsylvania personal income tax from each payment of taxable compensation to their employees. To obtain an employer withholding account, complete the Pennsylvania Online Business Tax Registration.
You will receive your registration notice in the mail in 7 to 10 business days.
If you have employees that are residents of a reciprocal state (Maryland, Indiana, Ohio, New Jersey, Virginia, West Virginia), you may withhold state income tax for your employee's resident state. Unless your employee is a resident of one of these states, you should withhold Pennsylvania personal income tax. To withhold the reciprocal state's tax, you should contact their Department of Revenue to register to withhold that state's tax. Your employee should complete Pennsylvania Form REV-419, Employee Non Withholding Application.
If you already have an employer withholding account with the Pennsylvania Department of Revenue, you can simply begin withholding at the rate of 3.07%. Pennsylvania does not have a form equivalent to the federal Form W-4 because the personal income tax is a flat rate of tax and does not change according to income brackets.
You may also be required to register for unemployment compensation (UC) taxes and file a New Hire report with the Pennsylvania Department of Labor & Industry. You can register for UC taxes at the same time you register for employer withholding taxes on the PA100.
For information on the Pennsylvania New Hire Reporting Program visit the Department of Labor & Industry, Center for Workplace Information & Analysis (CWIA).