Payroll Expense Tax is tax is collected by the City
WHO IS TAXED? All persons that engage, hire, employ, or contract with one or more individuals, as employees,
to perform work or render services within the City of Pittsburgh. The Payroll Tax is computed on the employer’s payroll
expense and on the net earning distribution of sole proprietors, individuals, partnerships, associations, joint ventures, or
other entities that perform work, provide service, or make sales within the City of Pittsburgh. You do not need to be located
in the City of Pittsburgh to be subject to this tax.
WHAT IS TAXED? One hundred percent of the payroll expense is attributable to the City of Pittsburgh for
employees who perform work or render services exclusively in the City of Pittsburgh. One hundred percent of the net
distributions are attributable to the City of Pittsburgh for person (s) who have net income from sales or services rendered
exclusively in the City of Pittsburgh.
For employers whose employees perform work or render services partly within and partly outside of the City of Pittsburgh, the
method of computing their payroll expense attributable to the City of Pittsburgh is to use the percentage of total number of
working hours employed within the City of Pittsburgh compared to the total number of hours employed (within and outside) the
City for each individual employee.
Persons who have net income distributions generated by sales or services partly within or outside the City of Pittsburgh shall
report on the net distributions or sale or services within the City. Where it is impractical to determine the exact net
distribution, an apportionment formula may be used. Any formula so established will be subject to review and correction by the
City of Pittsburgh Finance Department. The data supporting the formula must be maintained for at least 3 years as part of
office records for audit and review purposes.
TAX RATE: 5 ½ Mills (.0055)
PAYROLL EXPENSE DEFINED AS: The total compensation paid, including salaries wages, net distributions,
commissions, bonuses, stock options, and other compensation to all individuals (who during any work year) perform work or
render services in whole or in part in the City of Pittsburgh. Employee contributions such as, deductions resulting fro,
employee election, whether deferred or otherwise, qualified cash or deferred arrangements (under section 401 (K) of the
Internal Revenue Code) must be reported as taxable. Compensation meeting the definition of the earned income would be part of
the Payroll Expense Tax. The Payroll Expense Tax is on gross payroll. Employers’ portions of the federal and state
payroll taxes, health insurance, pension plans, etc., are not taxable.
COMMON EXCLUSIONS: A charitable organization, shall calculate the tax that would otherwise be attributable to
the City of Pittsburgh and file a return, but shall only pay the tax on that portion of its payroll expense attributable to
business activity for which a tax may be imposed pursuant to Section 511 of the Internal Revenue Code. If the charity has
purchased or is operating branch, affiliates, subsidiaries, whether or not the employees are leased or placed under the
auspices of the charities umbrella or parent organization.
FILING DATES: The Payroll expense Tax is to be paid as follows:
1st Quarter; Calculated on payroll expense of January, February, and March; Due May 31st
2nd Quarter; Calculated on payroll expense of April May, June, of the current year; Due August 31st
3rd Quarter; Calculated on payroll expense of July, August, September of the current year; Due November 30th
4th Quarter; Calculated on payroll expense of October, November, December, of the current year; Due February 28th of the
TAX FORM: ET-1
Pittsburgh Code Reference: Ch. 258
For new business registration call 412-255-2543
For additional forms have your city account number ready and call 412-255-2508
First Levied: 2005