If you live or work in Allegheny County, you owe a local earned income tax on top of Pennsylvania’s 3.07% state tax and federal income tax. The Allegheny County income tax is set by your home municipality and school district combined, and for most residents outside Pittsburgh it lands between 1% and 2%. Pittsburgh residents pay 3% (1% to the city, 2% to the school district).1City of Pittsburgh. Taxes The return is due April 15, and you have to file even if your employer already withheld the full amount.
How Your Rate Is Determined
Your rate depends on where you live, not where you work. Each municipality sets its own portion, each school district sets its own, and the two add together for your combined rate. Some communities have no municipal EIT at all, so the school district’s share is the only local piece you owe. A Jefferson Hills resident, for example, pays a total of 1.0%.
Every address in Pennsylvania is tied to a six-digit Political Subdivision (PSD) code, and that code is what determines your rate. You can look up your PSD code and the current rate on the Pennsylvania Department of Community and Economic Development’s online tool.2Pennsylvania Department of Community and Economic Development. PSD Codes and EIT Rates Rates change when municipalities adjust their levies, so it’s worth confirming yours each year before you file.
Your employer withholds based on the PSD code you give them on a Residency Certification Form. If they’ve been withholding at the wrong code, the mismatch shows up on your annual return and you’ll owe or be owed the difference.
What Income Is Taxed
The EIT applies only to income you actively earn: wages, salaries, tips, bonuses, commissions, and net profits from a business or professional practice. If it appears on a W-2 as compensation or a Schedule C as business profit, it’s almost certainly taxable.
A long list of income types is excluded:
- Interest, dividends, and capital gains
- Pensions, Social Security, IRA and 401(k) distributions taken after retirement age, and railroad retirement
- Unemployment compensation, public assistance, disability payments, and GI Bill benefits
- Federal active-duty military pay
- Gifts, alimony, child support, life insurance proceeds, and inheritances
- Employer-provided meals and lodging, use of company vehicles, employer-paid group life insurance premiums, and clergy housing allowances
- Lottery winnings and strike benefits
The distinction is simple. Money from working or running a business is taxed. Money from investments, benefits, or transfers is not.
Extra Taxes for Pittsburgh Residents and Workers
If you live in Pittsburgh, the 3% combined EIT is the largest piece but not the only local charge tied to the city. Employers operating within Pittsburgh pay a Payroll Expense Tax of 0.55% of payroll, and self-employed people and partners performing services in the city owe the same 0.55% on their own net earnings.3City of Pittsburgh. Payroll Expense Tax Form ET-1 There’s also a 5% amusement tax on admission to entertainment venues and events, and a 37.5% parking tax on gross parking fees inside the city.1City of Pittsburgh. Taxes The amusement and parking taxes are collected by venue operators and parking facilities, though the cost gets passed on.
The Local Services Tax
Separate from the EIT, most people working in Allegheny County owe a Local Services Tax of up to $52 a year. This is a flat annual tax on anyone who works within a municipality that levies it, no matter where they live. Employers withhold it in even installments across pay periods when the combined municipal and school district rate exceeds $10.4PA Department of Community & Economic Development. Local Services Tax (LST)
If your total earned income from all sources within the taxing jurisdiction is under $12,000 for the year, you qualify for a mandatory exemption and can apply for a refund of anything withheld. Active-duty military members and honorably discharged veterans with a 100% service-connected disability are also exempt. If you work in more than one municipality during the year, the total LST across all of them is still capped at $52.
Filing the Annual Return
The annual local earned income tax return is due April 15. Every Pennsylvania resident with earned income or net profits has to file, even if your employer withheld the full amount and you don’t expect a refund or a balance due.5Keystone Collections Group. File Your Local Earned Income Tax Return Online Assuming withholding takes care of it is one of the most common mistakes people make with this tax.
To file, you’ll need:
- W-2 forms from each employer showing wages and local tax withheld
- 1099 forms and PA Schedules C, E, F, or K-1 if you had business income or net profits6Pennsylvania Department of Community and Economic Development. Taxpayer Annual Local Earned Income Tax Return Instructions
- PSD codes for both your home address and your employer’s location
Allegheny County is split into four tax collection districts under Act 32. The two agencies that handle returns for the county are Keystone Collections Group and Jordan Tax Service, and which one you file with depends on which district your municipality falls into. Both offer online filing portals that let you upload documents, calculate your liability, and pay electronically, with an immediate confirmation as your proof of timely filing.
When you file, compare the local tax your employer actually withheld (line-by-line on your W-2) against what you owe at your home rate. Withheld too little, and you owe the difference. Withheld too much, and you can request a refund or roll the overpayment forward as a credit toward next year.
Quarterly Payments for Self-Employed Filers
If you’re self-employed or have income that isn’t subject to employer withholding, you have to make quarterly estimated EIT payments. The due dates are:
- First quarter (January–March): April 30
- Second quarter (April–June): July 31
- Third quarter (July–September): October 31
- Fourth quarter (October–December): January 31
These dates don’t match the federal estimated tax schedule, so don’t assume they line up. You still file the annual return by April 15, reconciling what you paid quarterly against what you actually owe. Skipping or underpaying installments can trigger penalty and interest charges dating back to the quarter the payment was due.
Penalties for Filing or Paying Late
Under Pennsylvania’s Local Tax Enabling Act, unpaid local income tax carries a penalty of 1% per month (or any fraction of a month), capped at 15% of the amount owed. Interest accrues on top of that at a daily rate tied to the rate Pennsylvania charges under the Fiscal Code.7Pennsylvania General Assembly. Local Tax Enabling Act If the collector has to sue to recover the tax, you’re also liable for the costs of collection.
The process usually starts with a written notice from the collection agency giving you at least 30 days to respond. From there, unresolved delinquency can move to a local magistrate court, with additional administrative costs added on.
If You Move During the Year
Moving between municipalities within the year splits your EIT liability. Your wages get allocated between residency periods based on the months you lived at each address, and the rate for each PSD code applies to its corresponding portion. Both PSD codes go on your annual return.
The step to take right away is notifying your employer. Fill out a new Residency Certification Form so withholding switches to your new address. Wait on that, and you’ll spend months withholding at the wrong rate — which becomes a reconciliation problem in April and possibly a balance due if your new community’s rate is higher than your old one.