What the LST?

If you live in PA or are running a business with Pennslyvania employees, you may have come across a little tax called "LST." It is a small tax (generally no more than $1 or $2 per paycheck, so it is frequently overlooked and, dare I say, ignored. So what is it?

LST stands for Local Services Tax. At one point in time it was referred to as Occupational Privilege Tax and here are the points you need to know:

• LST is a maximum of $52.00 and must be taken out with each paycheck. Previously, employers were allowed to take the full $52.00 at the beginning of the year, however, new rules mandate that an employer must debit the tax in each payroll.

• While $52.00 is the maximum some municipalities charge less. (to confirm what your municipality charges, use this website: PA Municipal Statistics )

• Unlike Local Income Tax, this tax is based on where the employee works not where they live.

• Not every township/school district charges Local Services Tax. For example, in Lancaster County, Manor Township does not charge LST. This means employees who work in this township, will not see this tax on their paystub.

• Some employees are EXEMPT from LST. Here are some examples

  • Employee has multiple employers - they only need to pay LST at one employer

  • Employee will make $12,000 or less during the year

  • Employee is working as a member of the military or clergy

If you are an employer and an employee indicates they are exempt, they should complete a Local Exemption Certificate that you will file with your local tax collection bureau.

Since it is one of the smaller taxes withheld from an employee check, it is easy to overlook. However, it is important and you will want to make sure you are administering, withholding, and reporting it correctly.

Questions? Feel free to reach out to us and we are happy to help, or if necessary help you be in contact with the appropriate professional!

Task It 2 ME is a Personal and Business Assistant Company. At times, at the direction of our clients, we provide bookkeeping assistance. We are not tax professionals. We can not and will not provide legal and/or tax advice. Any feedback and/or comment found in this post or any communications should not be deemed as legal or tax advice. Should you need such advice, please let us know and we will happily refer you to an appropriate professional