Pennsylvania payroll that works as hard as you do
Pennsylvania payroll compliance is no day at the shore. Luckily, Gusto handles local tax complexity while streamlining your day-to-day—from seamless time tracking to paperless hiring. Scranton to the Steel City, Gusto delivers turnkey payroll, HR, and more for the Keystone State.
Act 32 compliant
Gusto automatically applies the correct withholding rate based on your employees’ PSD and pays local EIT and LST where it’s due.
Easy money management
Integrated bill pay and invoicing means you take control of your cash flow, all in the same place you pay your team.
Admin off your plate
With fully automated taxes, intuitive time and scheduling tools, and built-in compliance, we work harder so you don’t have to.
A payroll provider businesses actually love.
88%
agree Gusto helps them stay compliant with regulations.‡
9 out of 10
customers would recommend Gusto*
4.5/5 stars
average rating from Gusto customers.*
Pennsylvania payroll tax compliance
Escape the local tax labyrinth.
With more than 2,500 local tax jurisdictions across the state, PA sports one of the most complex tax systems in the country. Add in “higher-of” withholding and Philly’s variable wage tax, and errors aren’t just common—they can be costly. Skip the stress while Gusto automatically calculates EIT and LST rates for your employees and remits to your tax district every time you pay your team.
Automated & Integrated
Forget the paperwork and get back to business.
Gusto was designed to make your life easier, from streamlined hiring and onboarding with PA state reporting to fully integrated time and scheduling your employees will love to use. It’s all intuitive, mobile-friendly, and it all seamlessly syncs to payroll. That means fewer spreadsheets, fewer errors, and the confidence to run your business knowing Gusto’s got your back.
Attract & retain talent
Build a business worth working for.
The Big Two may be the only cities with required paid leave, but benefits are good business no matter where you operate. On top of custom PTO policies, Gusto offers no-cost, low-cost, and premium benefits built for any budget. Plus employee self-service lets your team manage their time, PTO, benefits, and more from anywhere. We help you build a business worth working for—no matter what color your collar is.
✔ 9,000 plans across 30+ carriers
✔ Easy employee self-service
✔ Integrated 401(k)s
✔ Pay-as-you-go workers’ comp
✔ Free financial planning tools
✔ Wellness, commuter & fringe benefits
Key Pennsylvania regulations payroll professionals need to know
Pennsylvania minimum wage
The current Pennsylvania minimum wage is:
$7.25/hour for non-tipped employees
Pennsylvania pay stubs
Pennsylvania employers must provide employees with pay stubs that include:
Number of hours worked during the pay period
Pay rate
Total gross wages for the pay period
All taxes deducted
Other employee-authorized deductions, such as benefits
Start and end dates of the pay period
Pennsylvania pay periods
Pennsylvania businesses must pay their workers no more than 15 days after a pay period has ended, but you and an employee may agree to an alternative pay period. Pennsylvania does not mandate how often an employer must pay their employees. Employers may choose the payroll frequency that best suits their needs.
Determining time worked in Pennsylvania
In Pennsylvania, work hours are defined as any hours you require an employee’s presence on company grounds. It also includes travel time to complete business matters. Overtime pay begins when an employee works more than 40 hours in a workweek.
Pennsylvania overtime pay and tracking
With limited exceptions, you must pay employees time and a half after 40 hours worked in a week.
Pennsylvania final wage payment
If an employee parts ways with your business for any reason, you must pay all wages earned up to their point of departure by the next scheduled payday.
Income tax withholding in Pennsylvania
Pennsylvania employers must withhold a flat income tax of 3.07% from employee paychecks. Most locals in Pennsylvania also require employers to deduct Earned Income Tax (rates vary by locals) and Local Services Tax (usually a flat $10 or $52 annually). You can check to see if your employee must have these taxes withheld by checking their work and home address on Pennsylvania’s website.
Pennsylvania benefits
Workers in Pennsylvania are entitled to federal benefits such as Social Security and the Family and Medical Leave Act (FMLA). Under state law, the following benefit regulations are also important to note:
Workers’ compensation: Pennsylvania law requires most employers to purchase workers’ compensation insurance.
Health insurance: Under the Patient Protection and Affordable Care Act (ACA), any Pennsylvania employers with 50 or more full-time (or equivalent) employees must offer health insurance benefits. While Pennsylvania law does not require employers with fewer than 50 employees to offer health insurance, those who do offer this benefit are required to cover certain mandated benefits that go beyond the ACA’s minimums. Pennsylvania businesses can deduct health insurance costs from employee paychecks.
Sick leave:Employers don’t have to offer sick leave benefits under state law, but certain cities such as Pittsburgh and Philadelphia do require paid sick leave. Check with your local authorities to confirm if you are required to offer paid sick leave.
Jury Duty: Employers must allow unpaid time off for jury duty. Employees cannot be dismissed for attending jury duty.
Voting: Pennsylvania law does not require employers to offer time off to vote.
Finding the right payroll provider in Pennsylvania—Why Gusto?
1. Unlimited payroll
You have no payroll limits when you use Gusto. Our flexible payroll management platform can help you pay and manage a team of any size. With Gusto, you can pay contractors, hourly and salaried employees, workers paid at different rates, and remote team members with just a few quick clicks.
2. Tax filings and payments
No matter where in Pennsylvania your business is located, Gusto works seamlessly with local, state, and federal authorities to help ensure your obligations are met. Gusto reports new hires, files relevant tax forms, and allows you to make payments, all in one dashboard. We keep up with the latest list of requirements to make compliance easier for your business.
With Gusto, I think of payroll as a 30-second job now rather than 30 minutes and scary. The website is so friendly and a joy to use.
Pankaj Garg, Business Owner of Integrative Pain Clinic, LLC
3. Going paperless
Our user-friendly software can auto generate tax documents, including W-2s, 1099s, year-end tax forms, and quarterly tax forms. With just a few clicks within our platform, we email your team members their forms to e-sign, which you can then e-file or e-fax wherever they need to go.
4. Easy reporting
The same system that manages your payroll and tax obligations can generate reports to help you stay on top of where your money is going. Through our platform, you can also generate and download reports at no additional cost, including:
Paid time off
Tip credits
Payroll history
Contractor payments
Bank transactions
And more
5. Employee benefits
Offer your team the benefits they need. Through Gusto, you can offer and administer employee benefits such as:
Medical insurance
Flexible spending accounts
401(k) programs
And more
Frequently Asked Questions
Payroll providers in Pennsylvania must be Act 32 compliant, meaning they can handle the local earned income tax (EIT) withholdings across 2,500+ municipalities and school districts in the state. In addition, Philadelphia levies a separate wage tax. Gusto’s Pennsylvania payroll service automates PSD code lookups, local tax withholding, and we take care of all state and federal filings while we’re at it. Learn more about starting a business in Pennsylvania here.
Based on an employee’s work address and home address, the Political Subdivision (PSD) with the higher rate is used to decide an employee’s withholding. Employers then submit payments to their tax collection district (TCD), which is responsible for distributing them to the correct municipality and school district for each employee. You can use this Pennsylvania hourly paycheck calculator to see how much you’ll pay in local taxes depending on where you live and work.
If you have employees working from home in Pennsylvania, their home address is considered a work location, and must be registered as part of your business. As an employer, you’ll need to register the employee’s home address with the relevant tax collection district (TCD).
Philadelphia levies a wage tax for all workers in the city, whether or not they are full-time residents. As of 2026, residents pay 3.74% and non-residents who work in the city must pay 3.43% (unless their home district charges a higher rate, in which case, the “higher-of” rule applies). As an employer, your filing frequency is determined by the amount of total wage tax you withheld. You can see a full schedule and up-to-date rates here.
No. Gusto Gusto’s payroll services in Pennsylvania handle PA employer state tax registration, and new hire state tax registration, but local tax registration must be done by the employer. Once you are registered, however, we will remit all your local taxes to your TCD every time you run payroll.
Pennsylvania employers must track the number of hours an employee works during a pay period. Additionally, employers must track employee pay rates, pay period gross wages, tax and other employer-authorized deductions, and pay period start and end dates.
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