Pennsylvania Occupational Privilege Tax (OPT) and Local Services Tax (LST)

Calculate the taxes as follows:

  1. Divide the authority's annual maximum amount by the pay period frequency to determine interim pay period tax.

  2. Determine which Comparison should be performed:

    1. The interim Total Service Tax equals the sum of the interim pay period tax, the year-to-date tax for the given authority, and the total prior worksite tax.

    2. If the interim Total Service Tax is greater than the annual cap amount, then perform the Comparison to the annual cap.

      1. If the employee has only worked in taxing authorities that levied OPTs, the annual cap is $10.

      2. If at any point during the year an employee worked in a taxing authority that levied an LST, the annual cap is $52.

    1. If the interim Total Service Tax is less than or equal to the annual cap amount, then perform the Comparison to the authority maximum.

  1. Comparison against annual cap:

    1. If the interim Total Service Tax is greater than the annual cap, then the pay period tax equals the annual cap minus the year-to-date tax for the given authority and the total prior worksite tax.

  1. Comparison against the authority maximum:

    1. If the sum of the year-to-date tax for the given authority and the interim pay period tax is greater than the authority maximum, then the pay period tax equals the authority maximum minus the year-to-date tax.

If the tax amount is to be proportioned between the municipality and its associated school district then:

  1. Divide each authority's effective maximum amount by the total maximum between the coterminous pair to determine each authority's coterminous rate.

  2. Each authority’s pay period tax equals the calculated pay period tax (see above) multiplied by coterminous rate.

    1. Each authority’s pay period tax should be rounded down to the nearest cent, to ensure annual caps are not exceeded.

Calculation example:

Employee A previously worked in Ben Avon Borough in Allegheny county and already has $10 OPT withheld. The employee now works in Pittsburgh/Baldwin-Whitehall School District, and is paid on a bi-weekly pay period. This coterminous pair mandates an annual LST of $52 - $47 for Pittsburgh and $5 for the school district. Therefore, the following calculation applies to the new worksite: