How does the payroll process calculate Pennsylvania local Earned Income Tax?

When you run the payroll process for local Earned Income Tax (EIT):

1. It compares the person's Resident Income Tax Rate (city + school) and Nonresident Income Tax Rate (city).

2. It uses the higher rate for calculating local taxes.

3. In either of the following is the same, the payroll process withholds the resident tax.

   • Total rate

   • political subdivision (PSD) codes