Pennsylvania (PA) State Withholding Information
Withholding taxes for Pennsylvania are more complicated than other states, but this post will give an overview of the most important requirements. As usual, there are three separate parts to processing payroll: creating paychecks, filing the returns, and depositing the taxes. We will go over each in detail in this blog post.
Calculating PA State Withholding Tax
To calculate the taxes for paychecks in PA, the following taxes need to be withheld from the check: Pennsylvania State Withholding and Pennsylvania State Unemployment tax. Unlike a lot of other states, the PA Unemployment tax is partially paid by the employee as well as the company. To calculate PA state income tax withholding, the calculation uses a fixed percentage that is multiplied directly against your taxable income. For 2025, the tax rate is 3.07%. For the PA Unemployment tax, employees pay a fixed rate of 0.07%. Pennsylvania has a Wage Limit/Wage Base in that once you make more money than the limit, you no longer need to pay UI tax. For 2025, the Wage Limit is $10,000.
***Note that PA has many local taxes that will not be covered in this post. Make sure to check for local taxes when processing your payroll. You can add those taxes to be calculated in PaycheckManager, but we cannot pay them for you.***
Making PA Tax Payments
After calculating the taxes, you will then need to make tax payments to the state. Making tax payments in PA is similar to other states. The difference comes in their deposit schedules, of which there are 4, rather than the standard 3 for Federal taxes. The four deposit schedules are Quarterly, Monthly, Semi-Monthly, and Semi-Weekly. If your total withholdings are under $300, you are on a Quarterly schedule. If your taxes are between $300 and $999, you need to deposit taxes on a Monthly schedule. If your taxes are between $1,000 and $4,999.99, then you need to pay your taxes Semi-Monthly. Finally, if your taxes are over $5,000 for the quarter, the taxes are due on the following Wednesday if your payday is on Wed-Fri. If your payday is on Sat-Tues, then your taxes are due that Friday.
The default deposit schedule is Monthly for new companies, but if your withholdings increase, please make sure to make your deposits more frequently.
Filing PA Payroll Returns
For Pennsylvania, they have two quarterly payroll returns and one annual payroll return. The first quarterly return is called the PA W-3. While the name makes it seem like an annual form, it is their quarterly report. This form is pretty standard, it reports the PA taxable wages in addition to the tax deposits that were made for the quarter. The second quarterly form is called PA UC2. The PA UC2 is used to report the Pennsylvania UI taxable wages and the UI payments for the quarter. The last PA return is called the PA REV-1667. The PA REV-1667 is the state return that is used to report the individual’s W-2 information to the state. This return is the one that is filed once a year to report and reconcile the Federal W-2 with the state information. These three returns can all be filed through the MyPath system, which is run by the state of Pennsylvania. Our managed service can also file these returns and make the payments for you, as well as create paychecks and manage payroll.
Get Started
