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ACT 32 Earned Income

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.

What are my responsibilities?

Act 32 – For Municipalities

Employers who maintain worksites in PA or employ individuals who may work from their homes are required to withhold applicable earned income tax from those employees. Under Act 32, employers are required to withhold the higher of the employee’s resident earned income tax amount (rate of total resident EIT where they reside) vs. the employee’s municipal non-resident earned income tax amount (rate of total non-resident EIT where they are employed). Employers are required to obtain information in the Residency Certification Form for every employee.

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