Locum Tenens Taxes in Pennsylvania

Pennsylvania doesn't have a separate nonresident form. Residents and nonresidents both file the PA-40; a nonresident simply marks the nonresident status oval and reports only Pennsylvania-source income. For a locum physician, that means the income attributable to days you physically worked in Pennsylvania.

The filing threshold is one of the lowest in the country: Pennsylvania generally requires a return once you have more than about $33 of Pennsylvania taxable income for the year. That is not a typo. There is no meaningful de minimis exception for a short assignment; if you were paid for work performed in Pennsylvania, plan on filing.

Part-year residency works the way you'd expect (you're taxed as a resident for the portion of the year you were domiciled in Pennsylvania), but most traveling physicians never become part-year residents. Working assignments in the state while maintaining your tax home elsewhere makes you a plain nonresident with Pennsylvania-source income, which is the simpler and usually cheaper status.

Pennsylvania sources personal-services income, whether it's W-2 compensation or 1099 business income, to the place where the services are physically performed. The location of the staffing agency, the address on your contract, and the state where your LLC is registered are all irrelevant. If you rounded on patients at a hospital in Scranton, the income tied to those days is Pennsylvania-source income.

For a 1099 locum who works multiple states in a year, the practical method is a working-day allocation: total net profit for the year multiplied by the ratio of Pennsylvania working days to total working days, unless you have contract-level records that tie specific payments to specific assignments (which is cleaner and usually better for you). Keep a day log. It's the single highest-value tax record a multi-state locum can maintain.

Pennsylvania has reciprocal agreements with six states: Indiana, Maryland, New Jersey, Ohio, Virginia, and West Virginia. Under those agreements, a resident of a reciprocal state who earns employee compensation in Pennsylvania pays tax only to their home state, and can file Pennsylvania Form REV-419 with their employer to stop Pennsylvania withholding.

Here's the part that matters for locums: the agreements cover compensation only. Self-employment income, independent-contractor income, and business income are explicitly outside the agreements. A 1099 locum physician who lives in Columbus and works assignments in Pittsburgh gets no reciprocity benefit at all. That physician files a Pennsylvania nonresident PA-40, pays Pennsylvania tax on the Pennsylvania-source income, and then claims a resident credit on the Ohio return.

If you work W-2 through an agency, the agency should withhold Pennsylvania tax on wages for work performed in Pennsylvania (unless reciprocity applies and you've filed REV-419). If you work 1099, nothing is withheld by default: not the 3.07% state tax, and not the local earned income tax. Both are your responsibility through quarterly estimated payments.

State estimates go in on Form PA-40 ES on the usual quarterly schedule. The local side has its own quarterly estimated requirement for net profits, generally paid to the tax collector for the district where you worked. Missing the local estimates doesn't just create penalties; it puts you on the radar of third-party collectors who administer the local tax and who are notably persistent.

Act 32 earned income tax (everywhere except Philadelphia)

Nearly every Pennsylvania municipality and school district levies a local earned income tax (EIT), administered through 69 countywide tax collection districts under Act 32. For W-2 workers, employers withhold at the higher of the resident rate where you live or the nonresident rate where you work. For self-employed physicians, the tax applies to net profits earned in the municipality where you conducted the work, reported on your own quarterly and annual local returns (the standard annual form is CLGS-32-1).

Rates vary by municipality; a common nonresident work-location rate is around 1%, though some jurisdictions are higher. The DCED's Municipal Statistics tax register lists the exact resident and nonresident rate for every municipality, and it's worth looking up your assignment location before you accept the contract, not after.

Philadelphia runs its own system

Philadelphia is not part of Act 32. It levies its own Wage Tax on W-2 workers and a Net Profits Tax (NPT) on self-employed individuals, at some of the highest municipal rates in the country: for the 2025 tax year, 3.74% for residents and 3.43% for nonresidents, with small scheduled cuts phasing in each July under the city's multi-year reduction plan. A 1099 locum working a Philadelphia hospital owes NPT on the net profits from that work, on top of the 3.07% state tax. Self-employed individuals doing business in Philadelphia may also have a Business Income and Receipts Tax (BIRT) filing obligation, which has its own registration and return.

The standard locum S-corp playbook (elect S status once net income clears roughly $150,000 to $200,000, split reasonable compensation from distributions, save self-employment tax) works in Pennsylvania the same as anywhere. The state-specific wrinkles:

No entity-level franchise tax. Pennsylvania's old capital stock and franchise tax expired years ago, so an S-corp doing business in Pennsylvania files an information return (PA-20S/PA-65) and passes the income through to you at the flat 3.07%, with a PA Schedule NRK-1 reporting your nonresident share. There's no California-style minimum tax on the entity itself.

No PTET election. As of mid-2026, Pennsylvania remains one of the last states with no elective pass-through entity tax, so there's no SALT-cap workaround for Pennsylvania-source income. Legislation keeps being introduced, so recheck annually, but don't plan around it existing.

One trap for Pennsylvania residents: if you live in Pennsylvania and elect a PTET in another state where you work, Pennsylvania has taken the position that it credits entity-level taxes only when paid by an S-corporation, not a partnership or multi-member LLC taxed as a partnership. If you're a Pennsylvania-resident locum with an out-of-state PTET election, entity type suddenly matters a great deal.

And remember from Section 05: a Philadelphia assignment can pull the entity into BIRT territory, which is a separate cost line the S-corp break-even math needs to absorb.

Illustrative example, not a specific client outcome. A hospitalist lives in North Carolina (2026 flat rate 3.99%) and picks up $100,000 of 1099 net income from assignments in rural Pennsylvania, in a municipality with a 1% nonresident earned income tax. Here's how the pieces fit together.