Federal Insurance Contributions Act Tax (FICA)

• FICA contains two parts: OASDI (Social Security) and Medicare. The tax rate for OASDI(social security) is 6.20%.  The tax rate for Medicare is 1.45%.
• Students whose LionPath Academics section states in their Level/Load data, an Academic Course Load stated as Enrolled Half-Time or more in Graduate Assistant activities and receiving a payroll payment, are exempt from OASDI and Medicare taxes. (Academic Course 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 OASDI and Medicare tax exemption.

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 Non-Residents may update their W-4 Federal Tax election information as per the IRS W-4 instructions. (Federal Tax election) 
• Changes can be made at any time by logging into WorkDay.  At your home page click the Menu, then choose Benefits and Pay area to access the Pay drop-down selection with the section for Tax.

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)

Excerpt from PA Code $101.6(b)(4)

(b) Scholarships, stipends, grants and fellowships shall be taxable as compensation, if services 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 their 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.

 

Local Earned Income Tax (EIT)

As a Pennsylvania employer, the Pennsylvania State University is required to withhold Local Earned Income Tax (Local EIT) from wages based on your local primary home address in Workday and remit the tax to the appropriate Local Municipal taxing authority. 

If you do not have a permanent residence in the state of Pennsylvania, the Local Non-Resident tax rate of your work location will be withheld from wages.  

To find the Local EIT rate:

• 'An individual employee's Local Earned Income Tax (EIT) Rate is determined by comparing the employee's "Total Resident EIT Rate" (for the municipality in which the employee lives) to the "Work Location Non-Resident EIT Rate" (for the municipality in which the employee works). The applicable EIT rate owed and to be withheld is always the higher of the two rates.'

For more information on Local EIT and how it is determined, please visit Pennsylvania's Dept of Community & Economic Development (DCED).

You can also find your Local EIT withholding rates by entering your work and home addresses in the rate calculator provided by the Pennsylvania Dept of Community & Economic Development, PA Municipal Statistics.

If you change your resident address, please update your address at Accounts.psu.edu as this will have an impact on your Local EIT withholding.

Local Services Tax (Occupational Tax)

As a Pennsylvania employer, the Pennsylvania State University is required to withhold the Local Services Tax (LST).  LST is a local tax withheld from all individuals who are employed within a taxing local municipality within Pennsylvania.

You may qualify for an exemption for any of the following reasons:

1. Multiple Employers: You have more than one job and your primary place of employment withholds the LST.
2. Your expected total earned income and net profits from all sources within your work municipality will be less than $12,000*
3. Active-Duty Military Exemption
4. Military Disability Exemption

If you find any of the above situations applies to you, you may review and complete the Local Services Tax - Exemption Certificate.

The completed form and the required supporting documents may be mailed to:

PSU Payroll

101 James Elliott Building

120 S. Burrowes Street

State College, PA  16801