Payroll tax in Butler, PA stacks four withholdings on every paycheck: federal income tax and FICA, Pennsylvania’s flat 3.07% state income tax, a 1% local earned income tax, and a $52-per-year Local Services Tax. On top of what comes out of the employee’s pay, the employer owes federal and state unemployment taxes. Each piece goes to a different agency on its own schedule, and getting the local comparison wrong is the single most common error Butler employers make.
What You Withhold From Every Butler Paycheck
For an employee working inside Butler City, a typical paycheck has these deductions coming out:
- Federal income tax, based on the employee’s W-4
- Social Security at 6.2% and Medicare at 1.45% (FICA)
- Pennsylvania state income tax at a flat 3.07%
- Local earned income tax, generally 1% but set by comparing home and work rates
- Local Services Tax, $52 per year prorated across pay periods
The employer’s own tax bill sits on top of that: the matching 6.2% Social Security and 1.45% Medicare, federal unemployment tax, and Pennsylvania unemployment compensation. None of those come out of the employee’s pay.
The 1% Local Earned Income Tax
Butler City imposes a total earned income tax of 1% on earned income and net profits, applying to both residents and nonresidents who work within city limits.1eCode360. City of Butler Code – Article II Earned Income Tax The rate is shared between the city and the Butler Area School District. Pennsylvania Act 32, in effect statewide since 2012, consolidated collection so every employer sends the money to one designated county collector rather than a patchwork of municipalities.2Pennsylvania Department of Revenue. What is Act 32?
The 1% figure is not automatically what you withhold. When an employee lives somewhere other than Butler, you compare their total resident EIT rate (based on home address) with Butler’s 1% nonresident rate and withhold the higher of the two.3Pennsylvania Department of Community and Economic Development. Local Withholding Tax FAQs An employee living in a township with a 1.4% total rate but working in Butler City gets 1.4% withheld. If their home rate is 0.5%, you withhold Butler’s 1%.
That comparison depends on an accurate Residency Certification Form from the employee, which captures their home address and the six-digit Political Subdivision (PSD) code that routes the money correctly.4Pennsylvania Department of Community and Economic Development. Residency Certification Form Local Earned Income Tax Withholding Butler City’s PSD code is 100101. Employees can look up their own PSD code and rate through the Pennsylvania Department of Community and Economic Development’s address search tool.5Pennsylvania Department of Community and Economic Development. PSD Codes and EIT Rates A new form is required whenever an employee moves.
The $52 Local Services Tax
Butler City also charges a Local Services Tax of $52 per year on anyone who works within city limits, no matter where they live.6eCode360. City of Butler Code – Article III Local Services Tax You don’t pull the full $52 at once. Divide it by the number of pay periods and withhold that amount each pay cycle, rounded down to the nearest cent.7Pennsylvania Department of Community and Economic Development. Local Services Tax A biweekly employee pays $2.00 per check across 26 pay periods.
Employees whose total earned income from all sources inside the municipality is expected to come in under $12,000 for the year qualify for a mandatory exemption, but only if they file an exemption certificate with you. Without that certificate on file, you withhold.
If an employee works two jobs in the same jurisdiction, the LST is deducted from only one paycheck. The secondary employer stops withholding once the employee provides a pay stub from the principal employer and a DCED statement of principal employment. The total any one worker pays in a calendar year is capped at $52 regardless of how many municipalities they work in.
Pennsylvania State Withholding at 3.07%
Pennsylvania’s personal income tax is a flat 3.07%, applied to gross compensation for anyone earning income in the state.8Commonwealth of Pennsylvania. Employer Withholding There are no brackets and no filing-status adjustments. Multiply gross pay by 0.0307 and you have the withholding.
How often you send that money to the Pennsylvania Department of Revenue depends on the size of your quarterly withholding:
- Quarterly if total withholding is under $300 per quarter, due the last day of April, July, October, and January.
- Monthly if total withholding is $300 to $999 per quarter, due the 15th of the following month.
- Semi-monthly if total withholding is $1,000 to $4,999.99 per quarter, due within three banking days of the close of each semi-monthly period.
- Semi-weekly if total withholding is $5,000 or more per quarter, due Wednesday or Friday after the pay date depending on when payday falls.
Every employer files a Quarterly Withholding Return (Form W-3) electronically. The state does not accept paper W-3s, and submitting on the wrong form can trigger non-filer notices or misapplied payments.
Federal Income Tax and FICA
Federal income tax withholding runs off the employee’s W-4 elections. FICA has two pieces. Social Security is 6.2% on wages up to the 2026 wage base of $184,500, matched by the employer.9Social Security Administration. Contribution and Benefit Base Medicare is 1.45% on all wages with no cap, also matched. The employee’s share totals 7.65% up to the wage base and drops to 1.45% above it.
Once an employee’s year-to-date wages pass $200,000, an additional 0.9% Medicare surtax kicks in on the amount above that threshold. This one comes entirely from the employee, with no employer match, and the $200,000 trigger applies regardless of the employee’s filing status.
Federal income tax and FICA get reported on Form 941, the Employer’s Quarterly Federal Tax Return.10Internal Revenue Service. About Form 941, Employer’s Quarterly Federal Tax Return Deposits run on a monthly or semi-weekly schedule depending on your liability size, paid through the Electronic Federal Tax Payment System (EFTPS).
Unemployment Taxes You Owe as the Employer
Federal unemployment tax (FUTA) is employer-only. The statutory rate is 6.0% on the first $7,000 of each employee’s wages, but employers who pay their state unemployment on time get a 5.4% credit, bringing the effective rate to 0.6%.11U.S. Department of Labor. FUTA Credit Reductions That caps out at $42 per employee per year. Pennsylvania has not had a FUTA credit reduction in recent years.
Pennsylvania’s unemployment compensation (UC) tax funds the state’s unemployment insurance system. New non-construction employers pay 3.8220% to start, and new construction employers pay 10.5924%.12Commonwealth of Pennsylvania. UC Tax After you build an experience record, your rate adjusts against your reserve account balance. Experienced employers with a positive balance can land well below the new-employer rate; those with a negative balance can pay up to 10.6464%. Employees also contribute a small amount through payroll deduction. The Pennsylvania Department of Labor and Industry sets your rate each year.
Where Each Payment Goes and When
Four separate recipients handle four separate pieces:
- Federal income tax, FICA, and FUTA go to the IRS through EFTPS.
- Pennsylvania state withholding and UC go to Pennsylvania’s Department of Revenue and Department of Labor and Industry.
- Local EIT and LST go to Berkheimer Tax Innovations, the designated collector for the Butler County tax collection district.
Berkheimer collects on a quarterly cycle, with returns and payments due the last day of the month following each quarter:13Berkheimer. Earned Income Tax Quarterly Return DQ-1 FAQ
- Q1 (January–March): due April 30
- Q2 (April–June): due July 31
- Q3 (July–September): due October 31
- Q4 (October–December): due January 31
Berkheimer’s online portal takes electronic payroll uploads and bank transfers and generates a digital receipt for each submission. If a deadline falls on a weekend or legal holiday, it shifts to the next business day.
Penalties for Missing a Deposit
The IRS penalty for a late federal employment tax deposit escalates with each window you miss:14Internal Revenue Service. Failure to Deposit Penalty
- 1 to 5 days late: 2% of the unpaid deposit
- 6 to 15 days late: 5%
- More than 15 days late: 10%
- After an IRS notice demanding payment: 15%
Interest runs on the unpaid penalty until you clear it. These apply to income tax withholding, Social Security, Medicare, and FUTA. For a small Butler employer, one missed quarterly deposit can turn a bookkeeping slip into a four-figure bill. Keep your employment tax records for at least four years after you file the fourth-quarter return for the year.15Internal Revenue Service. Employment Tax Recordkeeping