Pennsylvania has a tax that surprises a lot of new LLC owners — not because it’s expensive, but because most people have never heard of it until they get a notice or start doing payroll. The Local Services Tax (LST) is a small fixed fee charged by municipalities across the state. Here’s what it is, whether your LLC owes it, and how it works.
What Is the Local Services Tax?
The Local Services Tax is a flat annual fee — not a percentage of income — charged by Pennsylvania municipalities and school districts to individuals who work within their jurisdiction. It’s sometimes called a “head tax” or “occupational privilege tax” in older documents.
Pennsylvania law caps the LST at $52 per year, per jurisdiction. Most municipalities that impose it charge the maximum. Some charge less — $10, $25, or other amounts. And roughly 360 of Pennsylvania’s 2,560 municipalities don’t impose an LST at all.
The LST applies to where you work, not where you live. If you work in a municipality that charges LST, you owe it — regardless of where your home or your LLC’s registered address is located.
Does My LLC Owe the LST?
The LST is levied on individuals — not on business entities directly. Here’s how it works depending on your situation:
How Much Is the LST and Who Collects It?
The amount varies by municipality, but Pennsylvania law sets a hard cap:
| LST Amount | Situation |
|---|---|
| Up to $52/year | Standard cap per jurisdiction where you work |
| $10 or less | Some smaller municipalities charge a lower rate |
| $0 | Approximately 360 PA municipalities impose no LST |
If you work in a municipality where the LST exceeds $10, it must be withheld in installments — typically $1 per week for weekly employees, or a proportional amount per pay period. Employers cannot collect the full annual amount in one lump sum from an employee’s paycheck.
LST is collected by each municipality’s local tax collector — not by the PA Department of Revenue. The collector varies by location:
You’ll need to identify the correct collector for the municipality where your LLC operates. The PA DCED local tax database (dced.pa.gov) is the fastest way to find this.
Is There an Exemption from the LST?
Yes. Pennsylvania provides a low-income exemption: if your total earned income from all sources during the calendar year is expected to be less than $12,000, you are exempt from the LST for that year.
To claim it, you must submit a low-income exemption certificate to your employer or to the local tax collector. The exemption is not automatic — you have to request it each year it applies.
Additional exemptions also exist for:
LST vs. Earned Income Tax: What’s the Difference?
Pennsylvania also has a local Earned Income Tax (EIT), which is a percentage-based tax on wages and self-employment income. The LST and EIT are separate obligations and often both apply to the same worker:
| Tax | Type | Based On | Collected By |
|---|---|---|---|
| Local Services Tax (LST) | Flat fee, up to $52/year | Working in the jurisdiction | Local tax collector |
| Earned Income Tax (EIT) | Percentage (typically 1–2%) | Wages and net profits | Local tax collector |
Both taxes are hyper-local — rates vary by municipality and sometimes by school district. The LST is only owed where you work. The EIT can be split between where you work and where you live, based on a formula. They’re different calculations and go to different collectors in some jurisdictions.
How to Find Out If Your Municipality Charges LST
The fastest way: use the PA DCED local tax database at dced.pa.gov. You can look up any PA municipality by name and get:
If your LLC operates in multiple PA municipalities — say, you perform work at client sites across several townships — check each one. You only owe LST to the jurisdiction where you do the most work, but you need to know each municipality’s rate and collector to sort that out correctly.
Frequently Asked Questions
If you work from home, you owe LST to the municipality where your home is located — assuming that municipality imposes one. Your LLC’s registered address doesn’t matter; what matters is where you actually perform the work.
You owe LST based on where you personally work, not your registered office address. If you work from your home in Upper Merion Township, that’s where your LST obligation sits — not wherever your registered agent is located.
The LST is levied on individuals who work in a jurisdiction, not on corporate entities. Even if your LLC has elected S-corp or C-corp tax treatment, the LST applies to the individual people performing work — officers, employees, and owners who are actively working in the business.
For self-employed individuals, the LST is typically due quarterly. For employees, it’s withheld from each paycheck and remitted quarterly by the employer. Deadlines are set by each municipality’s local tax collector — check with the collector for your specific jurisdiction.
Yes — $52 is the statutory cap set by Pennsylvania law, and it’s intentionally low. The LST is meant to be a modest user fee for local services, not a significant revenue source. That said, it adds up if you have employees — withholding $52 per year per employee across a team creates real administrative work even if the dollar amounts are small.
They’re the same concept under a new name. Pennsylvania renamed the Occupational Privilege Tax to the Local Services Tax in 2005. Some older references and municipal materials still use the OPT name, but they’re referring to the same obligation.
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