§ 113.3. Computing withholding of Pennsylvania Personal Income Tax.
(a) The Pennsylvania Personal Income Tax to be withheld shall be at the rate prescribed in Article III of the TRC (72 P. S. § § 7301—7361). For example, the rate applicable to the first pay period beginning on or after:
January 1, 1983 is 2.45
July 1, 1984 is 2.35
January 1, 1986 is 2.20
September 1, 1986 is 2.10
(1) Regular compensation. Computation of withholding tax on regular compensation shall be made in accordance with the following:
(i) For a payroll period an employer shall compute the tax to be withheld from the compensation of an employee by multiplying the compensation by the rate prescribed in Article III of the TRC.
(ii) The term “payroll period” means a period for which a payment of compensation is ordinarily made to an employee by his employer and may be a daily, weekly, biweekly, semimonthly, monthly, quarterly, semiannual or annual period.
(2) Supplemental or other compensation. If supplemental, such as commissions, overtime pay, vacation pay, bonuses, and so forth, or other compensation is received by an employee, an employer shall determine the tax to be withheld by adding the supplemental or other compensation for the current payroll period and multiplying the amount by the rate prescribed in Article III of the TRC.
(b) In addition to the tax required to be withheld, an employer and employee may agree that an additional amount be withheld from the employee’s compensation. The agreement shall be in writing, and the amount deducted and withheld under the agreement between the employer and employee shall be considered as tax required to be deducted and withheld, and statutes and regulations applicable to the tax are applicable with respect to an amount deducted and withheld under the agreement.
(c) Except as provided in subsection (d):
(1) Any amount lawfully deducted by an employer from the remuneration of an employee shall be deemed to be a part of the employee’s remuneration and to have been paid to the employee as compensation at the time the deduction is made.
(2) Any amount paid by an employer on behalf of an employee without deduction from the remuneration of, or other reimbursement from, the employee on account of any liability or obligation of, or payment required from, an employee shall be deemed to be paid to the employee as compensation at the time the payment is made.
(3) Any payment made to an employee, third party or fund under a cash or deferred arrangement under which an employee may unilaterally elect to have the employer make payments to the third party or fund for the benefit of the employee or to the employee directly in cash shall be deemed to be paid to the employee as compensation at the time the payment is made.
(4) Any payment made to an employee, third party or fund under an arrangement under which an employee may unilaterally choose between two or more benefits consisting either of cash and coverage under a plan or coverage under two or more plans shall be deemed to be paid to the employee as compensation at the time the payment is made.
(d) Amounts specified in a cafeteria plan document as being available to the employee for the purpose of selecting or purchasing benefits under a plan or as additional cash remuneration received in lieu of coverage under a plan are excludible from tax and withholding if the following apply:
(1) They were not actually or constructively received, after taking section 125 of the IRC (26 U.S.C.A. § 125) into account.
(2) The benefits selected or purchased are nontaxable under the IRC when offered under a cafeteria plan described in section 125 of the IRC.
(3) The payments made for the plan would be nontaxable under § 101.6 (relating to compensation) if made by the employer outside a cafeteria plan described in section 125 of the IRC.
Authority The provisions of this § 113.3 amended under section 354 of the Tax Reform Code of 1971 (72 P. S. § 7354).
Source The provisions of this § 113.3 amended January 20, 1984, effective January 21, 1984, 14 Pa.B. 222; amended January 2, 1987, effective January 3, 1987, 17 Pa.B. 59; amended December 26, 2003, effective December 27, 2003, 33 Pa.B. 6423. Immediately preceding text appears at serial pages (205381) to (205382).
Cross References This section cited in 61 Pa. Code § 113.11 (relating to special deposits and trust accounts).
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