The PA LST entry in Box 14 of your W-2 is the Pennsylvania Local Services Tax, a flat local tax of up to $52 per year that your employer withheld from your paychecks based on where your job is physically located. It appears in Box 14 for informational purposes only.1Commonwealth of Pennsylvania. W-2 Frequently Asked Questions You don’t owe anything extra at tax time because of what’s listed there, but if you qualified for an exemption or had the tax taken from more than one job, you can apply to get some or all of it back.
What the LST Pays For and Who Collects It
Pennsylvania municipalities and school districts use the Local Services Tax to fund services like police, fire, and road maintenance. The jurisdiction that collects it is the one where you physically work, not where you live. If you commute from one county to a job in another, the municipality holding your worksite is the one that gets the tax.
The combined amount a municipality and its overlapping school district can charge is capped at $52 per person per calendar year. Where both impose the tax, the school district’s share is limited to $5 and the municipality takes the rest.2PA Department of Community & Economic Development. Local Services Tax (LST) Not every jurisdiction charges the full $52, so your Box 14 figure may be lower.
Why the Amount in Box 14 Looks the Way It Does
Your employer’s withholding method depends on the combined rate your worksite imposes.
When the combined municipal and school district rate is more than $10, the tax has to be spread across every pay period in the year. A $52 tax comes out to $1 a week for a weekly paycheck, or about $4.33 a month for monthly pay. The employer isn’t allowed to pull the whole amount at once.3PA Department of Community & Economic Development. Local Withholding Tax FAQs
When the combined rate is $10 or less, your employer can take the entire year’s tax out of your first paycheck.3PA Department of Community & Economic Development. Local Withholding Tax FAQs That’s why a worker who started a job in January may see the full amount in Box 14, while someone whose rate is higher sees a figure built up gradually over the year.
Who Doesn’t Have To Pay the LST
Pennsylvania law exempts several categories of workers. If you fit one of them, you can either file an exemption certificate ahead of time to stop withholding, or request a refund after the year ends.
Low-Income Workers
Any jurisdiction that charges a combined LST rate above $10 must exempt workers whose total earned income and net profits from all sources within that jurisdiction come in under $12,000 for the calendar year.2PA Department of Community & Economic Development. Local Services Tax (LST) This exemption is mandatory where it applies. Jurisdictions charging $10 or less are not required to offer it, though some do voluntarily.
Military Service Members and Certain Veterans
Two groups connected to the military qualify for an exemption:
- Members of any reserve component of the armed forces who are called to active duty are exempt during their period of service.
- Honorably discharged veterans who served in any war or armed conflict are permanently exempt if they are blind, paraplegic, a double or quadruple amputee as a result of military service, or 100% disabled from a service-connected disability.2PA Department of Community & Economic Development. Local Services Tax (LST)
Veterans claiming the disability exemption need to provide a copy of their discharge orders and a statement from the U.S. Veterans Administration documenting the qualifying disability.4Pennsylvania Department of Community and Economic Development. Application for Exemption From Local Services Tax
Filing an Exemption Certificate in Advance
If you know at the start of a year that you’ll qualify, give your employer a signed exemption certificate so the tax never comes out of your pay. For the low-income exemption, you certify that you reasonably expect your total earned income and net profits inside the jurisdiction to stay under $12,000.2PA Department of Community & Economic Development. Local Services Tax (LST) You can also file a certificate if another employer is already withholding LST for the same jurisdiction. Certificates typically expire at the end of each calendar year, so a new one goes in each January.
If You Had Two Jobs in Different Municipalities
Only one jurisdiction has the right to collect the LST from you in a given year, no matter how many places you worked. For rates above $10, the primary place of employment is set on the day you first become subject to the tax during that payroll period. For rates of $10 or less, priority runs in this order:3PA Department of Community & Economic Development. Local Withholding Tax FAQs
- First, the municipality where you maintain your principal office or are principally employed.
- Second, the municipality where you both live and work, if it levies the LST.
- Third, the municipality where you work that is nearest your home and imposes the tax.
You can stop a second employer from withholding by showing them a recent pay statement from your primary employer that shows the LST already coming out. Include the employer’s name, the pay period length, and the LST amount withheld, along with a written statement naming that employer as your principal.5Pennsylvania Legislature. Pennsylvania Local Tax Enabling Act If both employers withheld and your combined LST exceeds $52, apply for a refund of the excess.
How To Get an LST Refund
If LST was withheld from your pay and you qualified for an exemption, or you were over-withheld because of multiple jobs, you can claim it back. For the current tax year, your employer may be able to issue the refund directly and adjust its next quarterly return. For prior years, or when your employer can’t process it, you file with the local tax collector.
Fill Out the Refund Application
Use the official Application for Refund of Local Services Tax, which asks for your personal information and a list of all employers for the tax year in question.6Pennsylvania Department of Community and Economic Development. Local Services Tax Refund Application Form Attach copies of your final pay statements from all employers within the jurisdiction. For a low-income claim, include documentation showing your total earned income came in below $12,000. For a multiple-employer claim, include a pay statement from each employer showing the name, payroll period length, and LST withheld.
Find the Right Tax Collector
Send the refund application to the tax collector for the municipality or school district where you worked, not where you live. The Pennsylvania Department of Community and Economic Development runs a Municipal Statistics tool at apps.dced.pa.gov that lists the designated LST collectors by work address.7Municipal Statistics. Find Local Withholding Rates by Address The collector may be a municipal office or a third-party agency. Contact them to confirm your worksite falls within their boundaries before you send anything in.
What Happens After You File
Mail your signed application and supporting documents to the collector you identified. Some accept online submissions. The tax collector has to process refunds within 75 days of either receiving your request or January 30 of the year after the tax was paid, whichever is later.2PA Department of Community & Economic Development. Local Services Tax (LST) Keep copies of everything you send.
Does the LST Affect Your Federal Return?
The LST amount in Box 14 is reported for informational purposes.1Commonwealth of Pennsylvania. W-2 Frequently Asked Questions Whether it counts as a deductible state and local tax on your federal return isn’t settled. Guidance from tax professionals varies, and the IRS does not address the LST by name. If you itemize on Schedule A, ask a tax preparer whether the amount can be included under state and local taxes.