The Bucks County earned income tax is a local tax on wages, salaries, and self-employment profits that ranges from 0.5% to 1.75% depending on your municipality and school district, with most residents paying a combined rate of 1%.1Pennsylvania Department of Community and Economic Development. Bucks County Tax Collection Committee Audit Keystone Collections Group collects the tax for every municipality in the county, and you file one annual return with them by April 15.2Pennsylvania Department of Community and Economic Development. Local Income Tax Collector
What Rate You Actually Pay
Your total rate has two parts: a municipal portion and a school district portion. In most Bucks County communities each portion is 0.5%, giving a combined rate of 1%. Newtown Township is a typical case, with 0.5% to the township and 0.5% to the Council Rock School District.3Newtown Township. Local Tax Information A handful of municipalities have set higher rates to meet budget needs, pushing the combined total as high as 1.75%.1Pennsylvania Department of Community and Economic Development. Bucks County Tax Collection Committee Audit
The rate tied to your address is identified by a six-digit Political Subdivision (PSD) code. The first four digits are your school district, the last two your municipality. Look up your PSD code and rate through the Pennsylvania Department of Community and Economic Development’s address search tool, or ask Keystone directly.4Pennsylvania Department of Community and Economic Development. PSD Codes and EIT Rates The tax is flat: no brackets, no standard deduction, no personal exemptions. Every dollar of earned income is taxed at the same rate.
What Income Is Taxed
The tax applies to earned income only. That covers wages, salaries, bonuses, commissions, tips, and other compensation from employment, plus net profits from self-employment, a business, a profession, or a farm.5Pennsylvania General Assembly. Local Tax Enabling Act If you’re self-employed, you owe tax on net profit, not gross revenue, calculated the way you do for your federal Schedule C or Schedule F.
The statute carves out three specific exclusions: wages for active military service, offsets for business losses, and clergy housing allowances.5Pennsylvania General Assembly. Local Tax Enabling Act Plenty of other income sits outside the tax because it isn’t compensation for services at all. Interest, dividends, capital gains, rental income, Social Security, pensions, disability benefits, unemployment compensation, public assistance, gifts, and inheritances are not subject to the tax. A retiree whose income is entirely pensions, Social Security, and investments owes nothing.
How Withholding Works
Your employer withholds the tax from every paycheck based on where you live, not where you work.6Pennsylvania Department of Community and Economic Development. Local Income Tax Information If you live in one Bucks County township and commute to another, your home municipality and school district still receive the revenue. Employers set the withholding rate from the residency certification form you fill out when you’re hired or when you move.
Withholding gets the system close, but it rarely gets it exact. If you changed jobs mid-year, moved, had income from more than one source, or your employer withheld at the work-location rate rather than your home rate, your withholding will miss the mark. That is why the annual return still matters even when you expect no change.
Filing Your Annual Return
You must file an annual return whether you owe a balance, are due a refund, or had the exact amount withheld.7Pennsylvania Department of Community and Economic Development. Taxpayer Annual Local Earned Income Tax Return Instructions The deadline is April 15, matching the federal and state due dates.8Keystone Collections Group. File Your Local Earned Income Tax Return Online A federal filing extension does not extend your local deadline automatically. If you need more time, contact Keystone directly about its extension procedure.
What You Need
Pull your W-2s from every employer during the year. The figure you want is in Box 18 (local wages). If Box 18 is blank, use Box 16 (state wages). Box 19 shows the local tax your employer already withheld. If you’re self-employed, bring your Schedule C or Schedule F showing net profit, plus any 1099-NEC forms. You’ll also need your PSD code.
Completing and Filing the Return
The math is simple. Enter your total earned income, multiply by your resident rate, and subtract what your employer withheld. If withholding exceeds what you owe, you get a refund. If it falls short, you pay the difference. The most common cause of a balance due is working in a jurisdiction with a lower rate than where you live.
Keystone Collections Group offers electronic filing through its e-file portal, which runs on computers, phones, and tablets. The system calculates in real time, apportions income between municipalities if you moved during the year, and applies out-of-state credits if you worked outside Pennsylvania.8Keystone Collections Group. File Your Local Earned Income Tax Return Online You can schedule your payment to arrive by the due date as part of the filing. If you prefer paper, mail a signed return with your W-2 copies to Keystone’s central office in Irwin, Pennsylvania.2Pennsylvania Department of Community and Economic Development. Local Income Tax Collector
Late Filing Penalties
Miss the deadline and you’ll owe a penalty of 1% per month on the unpaid tax, capped at 15% of the original amount. Statutory interest accrues monthly on top of the penalty.9Keystone Collections Group. How Is the Penalty and Interest Accrual Calculated for Earned Income and Local Service Taxes The clock starts the day after April 15, so even a small balance grows over several months. Filing on time with a zero balance avoids this entirely.
If You Work in New Jersey or Remotely
Bucks County sits on the New Jersey border and many residents commute across the Delaware River. Pennsylvania has a reciprocal income tax agreement with New Jersey (along with Indiana, Maryland, Ohio, Virginia, and West Virginia), so your New Jersey wages are not subject to New Jersey state income tax; you pay Pennsylvania state income tax instead. Reciprocity covers state tax only. Your local earned income tax still follows your residency, so your Bucks County municipality and school district collect at your resident rate. A New Jersey employer may or may not withhold Pennsylvania local tax, so check your W-2 at year-end. If nothing was withheld, you’ll owe the full amount when you file.
Remote workers who live in Bucks County and work for an out-of-state employer are generally taxed where they physically perform the work. Working from home in Pennsylvania means your income is subject to Pennsylvania state tax and your local Bucks County earned income tax. Some states apply a “convenience of the employer” rule that could also claim taxing rights, though Pennsylvania itself does not impose that rule on outbound workers.
Local Services Tax Is a Separate Charge
Many Bucks County municipalities also impose a Local Services Tax (LST), a flat annual fee on anyone working within the municipality. It’s separate from the earned income tax and does not replace it. In Newtown Township the LST is $52 per year, split between the township ($47) and the Council Rock School District ($5).10Newtown Township. Local Services Tax Information The amount varies by municipality, but most communities that levy it charge $52 or less. Unlike the earned income tax, the LST is based on where you work, not where you live, and employers withhold it in small increments over the year. Workers below a certain income threshold may qualify for an exemption or refund depending on the local ordinance.