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Earned Income Tax  

The Earned Income Tax  is commonly referred to as the wage tax, and it tax is applied to City and School District residents who earn income and net profits.  Nonresidents of Pennsylvania who work within the City pay 1%.  Here are the specific regulations pertaining to Earned Income Tax:

Although wages are the most common source of income taxed, wages are not the only source taxed.

As part of the Earned Income Tax, the Net Profits Tax applies to the net income from business, professions and other self-employment endeavors.  This includes but is not limited to:  accountants, attorneys (both as sole proprietor or as a partner), real estate sales representatives on commission, taxi drivers, consultants, authors, and those receiving rental income even if the taxpayers have another source of taxable income.

Who is taxed?  The tax is applied to people who earn income and net profits and are City and School District residents.  Non-Pennsylvania residents who work within the City pay 1%.  Mt.Oliver Borough residents pay the School Income Tax to the City which acts as the tax collector for the School District. Mt. Oliver Borough residents pay the School Earned Income Tax to the City which acts as the tax collector for the School District.  Mt. Oliver residents must also file directly with the Mt. Oliver Borough tax office to report the Borough Earned Income Tax.

What is taxed?  Wages, salaries,tips, compensation that is earned, bonuses, other incentives, net profit from businesses or professions and net profit from rental.

Common Exclusions:  Interest, dividends, active duty pay from the Armed Forces, pensions, social security and capital gains.

Common Deductions: Mileage or overnight business trips when required by an employer.

Common Credits: Up to 1% of income taxes paid to municipality in another state and not claimed on the PA-40.  This credit applies to the city tax only,

Filing Deadline:
(1) Annual filing of PGH-40 is due April 15.
Taxpayers may file joint returns at their options.

(2) Quarterly estimates are due as follows:
1st quarter - April 15
2nd quarter - June 15
3rd quarter - Sept. 15
4th quarter - Jan. 15

Quarterly filings are due when the source of income is not subject to withholding of City and School earned income tax.  It is required that quarterly payments equal to or exceeding 75% of the ultimate tax liability be paid; unless the additional tax due is less than $200 or where the sum of all prepayments equals or exceed the previous year's tax liability.

If a person is employed for wages and has the EIT withheld by his/her employer, but also has self-employment income, estimates must be filed to cover the self-employment income.

Forms Used:

Those who are self-employed make quarterly payments on Form NP-5.

Department of Finance
200 City-County Building
414 Grant Street

Pittsburgh, PA 15219-2476
Phone: 412-
Fax: 412-255-8649