Local Taxes When Moving to Pennsylvania: Earned Income Tax, Local Services Tax and How to Find Your Rate

Pennsylvania has a flat state income tax, and most residents also pay a local Earned Income Tax set by their municipality and school district. Some workers also pay a Local Services Tax. If you're relocating to South Central Pennsylvania, that second layer of tax often catches new residents off guard, mostly because it isn't one number. It's set locally, which means your rate depends on the exact address you move into.

We get this question a lot from buyers coming into our Lancaster, Lebanon, Cumberland, York, Dauphin and Perry County communities, especially those relocating from states with a single flat local tax or none at all. This guide walks through what the local Earned Income Tax actually is, how the Local Services Tax works, and how to look up your rate before closing day instead of guessing.

Key Takeaways

• Pennsylvania's state income tax is flat, but most residents also owe a local Earned Income Tax (EIT) set by their municipality and school district.
• Your EIT rate is tied to your address. There's no single statewide local rate.
• Employers withhold whichever is higher: your home municipality's resident rate or your work location's non-resident rate.
• Some municipalities also levy a Local Services Tax (LST) on anyone working within their boundaries, with a $12,000 earned income exemption available where the combined LST rate exceeds $10.
• If you live outside Pennsylvania but work here, you still owe the work location's non-resident EIT rate and the LST.
• You can look up your exact local tax rate by address using the PA Department of Community and Economic Development's Municipal Statistics tool.
• After you move, you'll need to file a new Residency Certification Form with your employer so withholding reflects your new address.
• Local EIT and LST are separate from your property tax bill, which is billed independently by the county, municipality and school district.

What Is the Local Earned Income Tax in Pennsylvania?

Pennsylvania allows municipalities and school districts to levy an Earned Income Tax on residents who earn wages or net profits. That's the piece that surprises a lot of people moving in from out of state. You're not just dealing with one state tax return and one withholding line. You're dealing with a local rate that's set by whoever governs the ground you live on.

This is why two people working the same job for the same employer, living a few miles apart in different municipalities or school districts, can have different local tax obligations. The Pennsylvania Department of Community and Economic Development (DCED) oversees how this local system runs statewide (dced.pa.gov/?p=1541).

Where You Live vs. Where You Work

This is the part that trips people up most. Pennsylvania's local EIT system, established under Act 32, compares two numbers for every working resident: the "Total Resident EIT Rate" for the municipality where you live, and the "Work Location Non-Resident EIT Rate" for the municipality where you work. According to DCED, employers are required to withhold whichever of those two rates is higher (dced.pa.gov/?p=1541).

In practice, that means your home address and your job's address both matter. If you're buying a home in one county and keeping a job based in another, it's worth knowing both rates before you sign anything, even though we won't get into specific percentages here since those vary by jurisdiction and change over time.

The Local Services Tax

Separate from the Earned Income Tax, some Pennsylvania municipalities also levy a Local Services Tax (LST) on people who work within their boundaries, regardless of where those workers live. Per DCED, if a municipality and school district's combined LST rate is more than $10, the tax has to be withheld on a prorated basis across your paychecks rather than taken as a lump sum. If the combined rate is $10 or less, an employer can withhold it all at once from your first paycheck of the year (dced.pa.gov/?p=1541).

There's also a built-in exemption for lower-income workers. Any political subdivision that levies an LST above $10 is required to exempt individuals whose total earned income and net profits from all sources within that jurisdiction fall below $12,000 for the year. School districts can set their own exemption threshold too, anywhere from $0 up to $11,999, so the exemption isn't automatically identical to the municipality's (dced.pa.gov/?p=1541).

Moving to Pennsylvania From Out of State? What You Still Owe

If you're relocating here but your employer is based elsewhere and you physically work outside Pennsylvania, your out-of-state employer isn't required to withhold Pennsylvania's local EIT. But DCED is clear that you'll still owe your "Total Resident EIT Rate" based on your new PA home municipality, and you'd be responsible for quarterly estimated payments to your local tax collector if your employer doesn't withhold it voluntarily (dced.pa.gov/?p=1541).

The reverse situation matters too, especially for anyone commuting into PA for work while living just over a state line. If you work in Pennsylvania but live outside it, your Pennsylvania employer still has to withhold the non-resident EIT rate for your work location, plus the Local Services Tax, since your "Resident PSD Code" defaults to 880000 with a 0% resident rate (dced.pa.gov/?p=1541).

How to Find Your Local Tax Rate by Address

Because local rates are set by municipality and school district rather than statewide, the only reliable way to know your number is to look it up by address. DCED maintains an Address Search Application specifically for this, tied into its Municipal Statistics system, where you can enter a home or work address and get back the applicable PSD code and EIT information for that location (dced.pa.gov/?p=1541).

We'd encourage doing this before closing, not after. It takes a few minutes and removes the guesswork that otherwise shows up as a surprise on your first paycheck in your new home.

What to Do After You Move

Once you've closed on your new home, there are a couple of administrative steps worth knocking out early:

• File a new Residency Certification Form with your employer. This is the form that captures your updated address, PSD code and resident EIT rate, and it's what your employer uses to withhold correctly going forward.
• Know your local tax collector. Each Pennsylvania tax collection district has a designated collector responsible for EIT remittances. In Lancaster County, for example, that role is handled by the Lancaster County Tax Collection Bureau, which administers local EIT collection and compliance for employers and residents across the county.

Skipping this step is a common reason people end up with withholding mismatches in their first year after a move.

How This Fits With Property Taxes

It's worth being clear that none of this replaces your property tax bill. County, municipal and school district real estate taxes are billed separately, based on your property's assessed value, and they fund different things than the Earned Income Tax or Local Services Tax do. When you're budgeting for a move into South Central Pennsylvania, plan for both: the local income-based taxes tied to your paycheck, and the real estate tax bill tied to your home.

A Quick Lookup Beats a Guess

Local taxes in Pennsylvania aren't complicated once you know where to look. The rate follows your address, not a statewide table, so the fastest path to clarity is running your new home's address and your workplace's address through DCED's lookup tool before you move. It takes the guesswork out of a part of relocating that otherwise feels murkier than it needs to be.

If you're exploring a move to South Central Pennsylvania and want to talk through what life looks like in one of our communities across Lancaster, Lebanon, Cumberland, York, Dauphin or Perry County, our team is glad to help you think through the practical side of settling in, not just the home itself. Reach out to Garman Builders and we'll point you in the right direction.

FAQ

What is Act 32 in Pennsylvania?
Act 32 standardized how local Earned Income Tax is collected across Pennsylvania, generally consolidating collection to one tax officer per tax collection district rather than hundreds of separate local collectors.

Do I pay local income tax based on where I live or where I work in PA?
Both can apply. Your employer withholds whichever is higher between your home municipality's resident EIT rate and your work location's non-resident EIT rate.

What is the Local Services Tax in PA?
It's a tax some municipalities levy on anyone working within their boundaries. Where the combined municipal and school district rate exceeds $10, it must be withheld on a prorated basis per paycheck, and workers earning under $12,000 from that jurisdiction may qualify for an exemption.

If I move to Pennsylvania but still work for an out-of-state employer, do I owe local tax?
Yes. Your out-of-state employer isn't required to withhold it, but you still owe your resident EIT rate based on your new PA home municipality and may need to pay it directly through estimated payments.

How do I find my exact local tax rate by address?
Use the PA Department of Community and Economic Development's Address Search Application within its Municipal Statistics system to look up the PSD code and EIT rate for any specific address.

Are local Earned Income Tax and property tax the same thing?
No. Local EIT and LST are based on income and work location. Property taxes are a separate bill from the county, municipality and school district based on your home's assessed value.