PA Business Taxes: Requirements and Deadlines

Operating a business in Pennsylvania involves a multi-layered tax system that funds public services. The specific taxes a business must pay depend on its legal structure, industry, number of employees, and revenue. This guide covers the main tax types, registration, and filing processes.

Major Pennsylvania Business Taxes

Corporate Net Income Tax

The Corporate Net Income Tax (CNIT) applies to C-Corporations and entities electing that tax status. This tax is calculated on federal taxable income with Pennsylvania-specific adjustments and is levied for doing business in the Commonwealth. For tax years beginning in 2025, the CNIT rate is 7.99%.

Pennsylvania is phasing in a rate reduction, scheduled to reach 4.99% by 2031. For corporations operating in multiple states, Pennsylvania uses apportionment based solely on the company’s sales within the state to determine the taxable share of income.

Corporations must make estimated CNIT payments quarterly on the 15th day of the third, sixth, ninth, and twelfth months of the tax year. The annual return, Form RCT-101, is due 30 days after the federal corporate return deadline.

Pass-Through Entity Taxation

S-Corporations, partnerships, and most multi-member Limited Liability Companies (LLCs) are pass-through entities. The business itself does not pay income tax; instead, profits and losses pass through to the owners. These individuals report their share of the income on personal tax returns and pay Pennsylvania’s Personal Income Tax (PIT) at a flat rate of 3.07%.

While these entities do not pay income tax directly, they must file an annual information return. S-Corporations file Form PA-20S, while partnerships and LLCs file Form PA-65. The business provides each owner with a Schedule RK-1 or NRK-1, detailing their income share for personal tax filing.

Sales, Use & Hotel Occupancy Tax

Pennsylvania imposes a 6% Sales and Use Tax on most tangible personal property and certain services. Businesses selling taxable items must register for a sales tax license, collect the tax, and remit it to the Department of Revenue. Allegheny County adds 1% and Philadelphia adds 2% to the local rate.

Significant exemptions include unprepared food, most clothing, and prescription drugs. The Use Tax applies to taxable items bought from out-of-state sellers who do not collect Pennsylvania sales tax. If a business buys a taxable item for its use without paying sales tax, it must remit the use tax directly.

The Hotel Occupancy Tax applies to room rentals for fewer than 30 days. The state rate is 6%, and many counties add a local hotel tax.

Employer Withholding and Unemployment Taxes

Businesses with employees must withhold state Personal Income Tax from wages at the flat rate of 3.07%. These funds must be remitted to the Department of Revenue on a periodic basis, such as quarterly or monthly.

Employers must also pay state Unemployment Compensation (UC) tax, which is not deducted from employee wages. The tax is calculated on the first $10,000 of each employee’s annual wages. An employer’s specific tax rate is based on its history of unemployment claims.

For 2024 and 2025, employees also contribute 0.07% of their total wages to the UC fund. Employers must withhold this amount and remit it with their own UC tax payments using Form UC-2.

Local Business Tax Obligations

Business Privilege and Mercantile Taxes

Many Pennsylvania municipalities and school districts levy their own gross receipts taxes. A Business Privilege Tax is applied to service-based businesses, while a Mercantile Tax is levied on businesses engaged in wholesale or retail sales.

These taxes are separate from state-level taxes and are paid directly to the local taxing authority. Rates and rules vary significantly by municipality, so businesses must contact their local tax office to determine their obligations and calculation methods.

Local Services Tax

The Local Services Tax (LST) is a flat-rate tax levied by many municipalities on individuals working within their boundaries. Employers are responsible for withholding and remitting the tax. The maximum tax is $52 per year.

An exemption exists for employees who earn less than a certain amount, often $12,000, within the municipality. The LST funds local services like police and fire protection.

Earned Income Tax

Employers must also withhold the local Earned Income Tax (EIT) from employee pay. The EIT is a tax on an individual’s earned income, imposed by both the municipality and school district where the employee lives.

The employer withholds the tax based on the employee’s resident location, which is provided on a Certificate of Residency form. The collected funds are then remitted to the tax collector for that jurisdiction.

Registering Your Business for PA Taxes

Determining Tax Nexus

A business must determine if it has “nexus” in Pennsylvania, which is a connection significant enough to create a tax obligation. A physical presence, such as an office, warehouse, or employees in the state, establishes nexus.

Nexus has also expanded to include economic connections. For sales tax, an out-of-state business has nexus if its sales to Pennsylvania customers were $100,000 or more in the prior year. For the Corporate Net Income Tax, a business has nexus if it has $500,000 or more in gross receipts sourced to the state.

Information and Documents Needed

To complete tax registration, a business will need the following:

• A Federal Employer Identification Number (FEIN), unless you are a sole proprietorship with no employees
• The legal business name and any “Doing Business As” (DBA) names
• The business’s legal structure, physical address, and mailing address
• Names, addresses, and Social Security Numbers for all owners, partners, or corporate officers
• The company’s six-digit North American Industry Classification System (NAICS) code that categorizes its primary business activity

The PA-100 Enterprise Registration

The PA-100 Enterprise Registration is a single application used to register for most state taxes, including sales tax, employer withholding tax, and unemployment compensation tax. This form can be completed and submitted online through the state’s myPATH portal.

The online form guides applicants through a series of questions to determine which tax accounts are needed based on the business’s planned activities, such as selling goods or hiring employees.

Filing and Paying PA Business Taxes

Using the myPATH System

The primary method for filing returns and making tax payments is through the myPATH online portal. After registering, a business can set up its profile to manage its various tax accounts.

The portal guides the user through initiating a return for a specific filing period. The system pre-populates some business information, and the user enters financial data to calculate the tax due. Payments can be scheduled up to the return’s deadline.

Filing Frequencies and Deadlines

The frequency for filing returns and paying taxes varies by tax type and the amount owed. For Sales Tax, new businesses start on a quarterly schedule, but the Department of Revenue may require more frequent filing if tax collections exceed certain thresholds. Employer Withholding tax payments are also due on a periodic schedule, often quarterly for smaller employers and more frequently for larger ones.

Alternative Submission Methods

While myPATH is the preferred method, some tax forms may still be filed by mail, though electronic filing is often mandatory. The Department of Revenue may require businesses with very large tax liabilities to make payments via Electronic Funds Transfer (EFT). Businesses that meet the mandatory EFT payment threshold will be notified of this requirement.