Cost of hiring an employee in Pennsylvania

Pennsylvania is the one state in this cluster where employees also pay an unemployment contribution, and where local wage taxes add a layer of administration.

Updated 2026 figures

What makes Pennsylvania distinctive

The new employer unemployment rate in Pennsylvania is 3.822 percent on the first 10,000 dollars of wages, which lands the state cost near 380 dollars per employee per year. The rate is quoted to three decimal places because it is built from several components, including a surcharge and an additional contribution that the state adjusts periodically.

Pennsylvania is unusual in charging employees a small unemployment contribution as well. That is a withholding obligation rather than an employer cost, but it is one more line to configure correctly and one more thing new hires ask about.

The real administrative weight in Pennsylvania is local. Municipalities levy earned income taxes and local services taxes, and employers must remit to the correct collector for the work location and the residence location. Payroll providers handle it, but it is worth knowing the complexity exists before you promise a two week onboarding.

The employer cost breakdown in Pennsylvania

Employer FICA, 7.65 percent

Social Security at 6.2 percent up to the annual wage cap and Medicare at 1.45 percent with no cap. This is identical in every state and is the largest single statutory line for most employers.

Federal unemployment tax

Federal unemployment tax runs at the standard 0.6 percent effective rate on the first 7,000 dollars, about 42 dollars per employee per year.

Pennsylvania unemployment insurance

New employer rate: 3.822 percent for new employers. Taxable wage base: 10,000 dollars per employee per year. That works out at about 382 dollars per employee once the base is reached.Experienced employers are given an individual rate based on their own claims history, which can be lower or higher than the new employer figure.

Employees pay a small unemployment contribution in Pennsylvania, withheld from every paycheck with no wage base cap.
Local earned income tax and local services tax add remittance obligations that vary by municipality.
Construction employers are assigned a higher new employer rate than the standard figure.

Workers compensation

Pennsylvania workers compensation is priced by class code through a competitive market with a state fund available. Industrial codes sit above the national median.

Benefits and overhead

Medical premiums are moderate statewide, with Philadelphia plans running above Pittsburgh and rural equivalents at the same coverage level.Medical, dental, vision, life, disability and any retirement match usually dwarf the tax lines. Add equipment, software seats and a share of space or remote stipend on top.

Worked example: a 70,000 dollar salary in Pennsylvania

Total employer cost lands somewhere in the region of 86,000 dollars to 108,000 dollars a year. The range is wide because benefits design and workers compensation class code move the total far more than any tax rate does.

Base salary	70,000 dollars
Employer FICA at 7.65 percent	about 5,355 dollars
Federal unemployment	about 42 dollars
State unemployment	about 382 dollars
Workers compensation	about 250 to 2,300 dollars
Benefits and retirement	about 8,600 to 20,000 dollars
Equipment, software and overhead	about 3,000 to 11,000 dollars
Estimated total employer cost	86,000 dollars to 108,000 dollars

Budget setup time as well as money. The local tax layer is the part that delays first payroll runs in Pennsylvania.