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What is Act 32?

 


Act 32 is a law that reforms and standardizes the local earned income tax system. The appointment of collection responsibility falls on countywide committees made up of representatives from local municipalities and school districts. The committees established tax collection districts and elected tax officers to collect the Earned Income Tax (EIT).

Act 32 requires uniform withholding of earned income taxes and remittance to a single local collector or Tax Officer. The Act applies to the earned income taxes levied and collected after December 31, 2011.

Employers must begin to withhold the local EIT from employees on January 1, 2012. Appointed tax officers start collecting the EIT on January 1, 2012, unless the tax collection district has opted for early implementation.

 

***Employers are required to obtain information in the Residency Certification Form for every employee.***

 

How to find EIT rates and PSD Codes?

To determine EIT rates, PSD Codes, and tax collector/officer contact information, use the Address Search.

 

Does Act 32 apply to me as an Employer?


  • Do you have employees who live and work in PA?  - As an employer, you must compare the total resident vs. non-resident EIT rates for each employee, withhold the higher of the two and send it to the tax collector of the work address (standard Act 32 rules; the Residency Certification Form applies).

 

  • Do you have employees who live in PA but work outside of PA? - As an employer you are not obligated to withhold the employees’ home EIT rates, but would be obligated to withhold any local taxes at the work location, if any. The Residency Certification Form does not apply.

 

  • Do you have employees who work in PA but live outside PA? - As an employer, you are obligated to withhold local taxes at the work address and send them to the local tax collector. The Residency Certification Form applies.

 

I have employees that live and/or work in Philadelphia. Does Act 32 apply to them?


  • Do you have employees that live and work in Philadelphia? -  Current Philadelphia withholding rules apply.

 

  • Do you have employees that work in Philadelphia, but live outside of Philadelphia? - Current Philadelphia withholding rules apply.

 

  • Do you have employees that live in Philadelphia, but work in PA outside of Philadelphia? - Act 32 (and the Residency Certification Form) applies.

 

 


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