Reading, PA reduces local earned income tax withholding rate

Urgent Payroll Tax Alert - Reading reduces local earned income tax withholding rate

Effective 7/1/2022 the withholding rate for non-residents working in Reading is reduced from 1.3% to 1.0%

Under current law, employers located in the City of Reading, should be withholding local earned income tax from their employees who commute and work for them in the City- but live outside of the City- at a rate of 1.3%. The City of Reading has announced that effective July 1st,2022 it will reduce its non-resident withholding requirement from the original 1.3% rate to a 1.0% withholding rate: City of Reading Act 47 Exit Letter.

The City has adopted Bill No 89-2021 which removes the additional .3% non-resident earned income tax placed on non-resident commuter taxpayers. Organizations must begin withholding local earned income tax from employees who live outside of the city- but commute to work for the company in the City of Reading- at the new reduced rate of 1%. Failure to withhold local earned income tax from an employee who resides outside of the City at the reduced rate of 1% can lead to fines and penalties.

If you have questions regarding this tax blog article or the business use of a vehicle, please contact your Herbein tax consultant at info@herbein.com.

Article prepared by Tyler Hill.