State Taxation
The Pennsylvania State University is required to withhold federal, state, and local taxes from each pay you receive and remit to the appropriate taxing authority. This section provides an overview of those taxes.
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Summary Tax Charts
View 2023 Tax Rates
| Federal Taxes | Current Rate |
|---|---|
| FICA - Social Security(1) | 6.20% |
| FICA - Medicare(2) | 1.45% |
| Federal Withholding | Based on Form W-4 |
| (1)$160,200 cap for 2023; $147,000 cap for 2022; 142,800 cap for 2021; $137,000 cap for 2020; Resets annually (2)No Cap; Resets Annually; Over $200,000 is 2.35% |
|
| State Taxes | Current Rate |
| PA State Income Tax | 3.07% |
| PA State Unemployment Insurance | 0.06% |
| Local Taxes | Current Rate |
| Local Earned Income Tax (EIT) | Based on Address |
| Local Services Tax (LST) | Based on Work Location |
Graduate Assistant (GA)
| Is My Penn State University Income Taxable? | Will Tax Be Withheld From My Payment? | |
|---|---|---|
| Federal Income Tax | Yes | Yes |
| FICA (SS/Medicare) | Yes, unless: you qualify for student FICA exemption. See Fica section below. | Yes, unless: you qualify for student FICA exemption. See Fica section below. |
| PA State Income Tax | Yes, unless: You are identified as a Non-Taxable grad. assist. as per your TOO (terms-of-offer) you received from your department. | Yes, unless: You are identified as a Non-Taxable grad. assist. as per your TOO (terms-of-offer) you received from your department. |
| PA State Unemployment Tax | Yes, unless: you qualify for student FICA exemption. See Fica section below. | Yes, unless: you qualify for student FICA exemption. See Fica section below. |
| Local Earned Income Tax | Yes, unless: You are identified as a Non-Taxable grad. assist. as per your TOO (terms-of-offer) you received from your department. | Yes, unless: You are identified as a Non-Taxable grad. assist. as per your TOO (terms-of-offer) you received from your department. |
| Local Services Tax | Yes, unless: you qualify for exemption and complete a Local Services Tax Exemption Certificate. | Yes, unless: you qualify for exemption and complete a Local Services Tax Exemption Certificate. |
Federal Taxes
Federal Insurance Contributions Act Tax (FICA)
FICA contains two parts: OASDI (Social Security) and Medicare. The tax rate for OASDI(social security) is 6.2%. The tax rate for Medicare is 1.45%.
Students whose LionPath Academics section states in their Level/Load data, an Academic Load stated as Enrolled Half-Time or more while working and receiving a payroll payment, are exempt from FICA. (The Academic Load is not determined by the Payroll office.)
Please Note: Students must be appropriately registered for classes prior to payroll processing established deadlines, in order to be eligible for the FICA tax exemption benefit.
Federal Income Tax (FIT)
Federal income tax is calculated using the IRS Publication 15-T instructions. The amount of federal income tax deducted from your pay is determined by the elections entered on your electronic IRS Form W-4 federal tax elections in Workday. If Form W-4 federal tax election is not completed in Workday, a marital status of Single or Married Filing Separately (the highest rate) will be used to calculate federal income tax. US citizens and US resident aliens may update their W-4 federal tax election information as per the IRS W-4 instructions https://www.irs.gov/pub/irs-pdf/fw4.pdf at any time by logging into Worklion https://worklion.psu.edu/ and choosing the Workday (icon). At your home page choose the Pay application (icon), then Withholding Elections.
PA State Taxes
State Income Tax
Pennsylvania The tax rate for Pennsylvania State Tax is 3.07% of taxable wages and there is no wage limit.
However, any compensation received as a Graduate Assistant may be exempt from Pennsylvania State income taxes if conditions are met as indicated under PA. Code $101.6(b)(4) PA. Code $101.6(b)(4)
Begin Excerpt PA Code $101.6(b)(4)
(b) Scholarships, stipends, grants and fellowships shall be taxable as compensation, if serevices are rendered in connection there with.
(1) When used in this subsection, the following words have the following meanings, unless the context clearly indicates otherwise:
(i) Fellowship stipend or fellowship award - A fixed sum of money paid periodically for services or to defray expenses to a graduate student who is enrolled in a graduate degree program at a university.
(4) Fellowship awards and fellowship stipends are taxable compensation for services if the recipient is required to apply his skill and training to advance research, creative work or some other project or activity, unless the recipient can show that the recipient is a candidate for a degree and the same activities are required of all candidates for that degree as a condition to receive that degree.
End Excerpt
PA Local Taxes
Local Earned Income Tax (EIT)
As a Pennsylvania employer, the Pennsylvania State University is required to withhold local earned income tax from wages based on your local primary home address in Workday and remit the tax to the appropriate tax taxing authority.
If you do not have a permanent residence in the state of Pennsylvania, the non-resident tax rate where the campus is located will be withheld from wages.
The Local Earned Income tax is comprised of 2 parts – city tax and school district tax based on your permanent residence. If a locality does not impose a city tax, or the rate is lower than the non-resident rate where the campus is located, the non-resident rate of the campus will be deducted, not the resident rate of the your permanent residence.
Find your withholding rates by entering your work and home address in the rate calculator provided by the PA State of Community and Economic Development.
Update your address at https://accounts.psu.edu
Local Services Tax (Occupational Tax)
As a Pennsylvania employer, the Pennsylvania State University is required to withhold a Local Services Tax. LST is a local tax payable by all individuals who are employed within a taxing jurisdiction imposing the tax.
You may qualify for an exemption for any of the following reasons:
- Multiple Employers
- Expected total earned income and net profits from all sources within your work municipality will be less than $12,000*
- Active-Duty Military Exemption
- Military Disability Exemption
Link to the exemption form: https://dced.pa.gov/download/lstexemptioncertificate-4-pdf/?wpdmdl=56757 The completed form and supporting documents may be mailed to:
PSU Payroll
101 James Elliott Building
120 S. Burrowes Street
State College, PA 16801