The Bald Eagle Area, Bellefonte Area, Penns Valley Area, and State College Area School Districts and the municipalities located within each of these school districts jointly levy an Earned Income & Net Profits Tax. One of the key factors in determining liability for this tax relates to legal domicile. Individuals who are legally domiciled within the Centre County Tax Collection District are subject to the Earned Income & Net Profits Tax. The resident tax rate applies to all earnings and net profits regardless of whether or not an individual works within the resident municipality. Non-residents working within the Centre County Tax Collection District may, under certain conditions, be subject to the Earned Income and Net Profits Tax based on the worksite non-resident tax rate.
The Earned Income Tax applies to individuals who are self-employed as well as those who are employed by a business entity. Employers who have employees working within Pennsylvania must withhold the Local Income Tax from the employees regardless of whether or not the employees are residents of Pennsylvania.