Local Services Tax

Overview

The Local Services Tax (LST) has been around for a long time. However it was previously known as the Emergency Municipal Services Tax (EMST). And prior to that, it was known as the Occupational Privilege Tax (OPT). On January 1, 2008, the tax became officially known as the Local Services Tax.

Q: How is the tax used by municipalities and school districts?

A minimum of 25% of the tax revenues are to be used for emergency services, such as police, fire, and ambulance protection. Municipalities, but not school districts, are also permitted to use LST to reduce property taxes. Road construction and maintenance is also an acceptable use of LST tax revenues.

Q: Does everyone have to pay the tax?

Messiah University is located in Upper Allen Township, Cumberland County. Upper Allen Township currently has an EMS tax rate of $52.00. Therefore, unless an employee applies for an exemption of this tax, the employee will have $52.00 withheld.

Q: How is the tax collected from paychecks?

Since Upper Allen Township collects $52.00/year, employers in this municipality must collect the $52.00 in per-pay installments based on the maximum number of scheduled payroll periods for a given employee group in the calendar year (regardless of the number of pay periods actually worked during the year). For example, if an employee group is paid weekly by the employer, the tax must be withheld weekly. Regulations do not allow a $52.00/year lump withholding or a $13.00/pay withholding over an employee's first four pays of the calendar year.

When calculating an employee's LST per-pay withholding, the Payroll Office will review the number of scheduled pays for the employee group (e.g., 24 pays for semi-monthly; 26 pays for bi-weekly; 16 pays for students). The withholding rate will be based on the maximum scheduled number of pays for a full year. The calculation is $52.00 / [number of pays] and is rounded down to the nearest penny.

Semi-monthly employees: $52.00 / 24 pays = $2.17/pay

• Includes adjunct faculty who work less than 24 pays

• Includes bi-weekly employees working less than 26 pays as the pro-rata amount must still be calculated on a bi-weekly pay schedule based on 26 pays
• Includes temporary employees and sports camp employees as well, regardless of number of pays actually worked

Q: What if I have multiple jobs in one or more jurisdictions? Do I pay $52.00 to each?

No, the $52.00 withholding is limited to an annual limit of $52.00 regardless of the number of employers or political subdivisions in which the employee is employed.

Q: What if I resign or am terminated from Messiah during the tax year?

The tax law no longer requires Messiah to have withheld an employee's full $52.00 annual deduction by time of termination. Instead, employers are only required to withhold LST tax for those payroll periods in which the taxpayer is employed. The law requires subsequent employers to complete any remaining withholding. It is the employee's responsibility to notify subsequent employers if all, or part, of the LST tax was already withheld.

Q: Can I be exempted from the Local Services Tax?

Yes, an employee can be exempted in a number of ways. An employee can be exempted if: (1) they are employed by multiple employers (only the "primary" employer must withhold the tax); (2) an employee will earn less than the $12,000 annual wage limit in Upper Allen Township (known as the mandatory low-income exemption); (3) the employee is on active military duty; or (4) the employee has a military disability exemption.

For each of these exemptions, the employee is required to complete the Local Services Tax - Exemption Certificate (available here, in the Payroll Office, or at Cumberland County Tax Bureau). A copy of the employee's last pay stubs or W-2 forms for the year prior to the calendar year for which the employee is requesting an exemption must be attached to the exemption certificate.

In addition to filing the form with Messiah University, you are also required to submit a completed copy of the form, with appropriate attachments, to the Cumberland County Tax Bureau, whose address is on the form.

The exemption will be in effect for the remainder of the calendar year (i.e., from the point of submission for the exemption). Any tax already paid during the calendar year will need to be processed as a refund through the Cumberland County Tax Bureau.

Q: Can my exemption be revoked or terminated?

Yes, an exemption can be revoked for a given tax year in any of three ways: (1) Upper Allen Township instructs Messiah to withhold the tax; (2) the employee notifies the Payroll Office that they are no longer eligible for the exemption; or (3) the employer pays the employee more than $12,000 in wages during the calendar year.

Q: What happens if I exceed the $12,000 earnings limit?

The Payroll Office will be monitoring employee earnings when an exemption is requested. Should an employee exceed the $12,000 earnings limit, Messiah will withhold a "catch-up" lump sum for the period originally covered by the exemption and will then begin withholding at the standard per-pay withholding rate.

Q: What if I overpay my Local Services Tax? Can I get a refund?

Tax refunds are requested via the Local Services Tax - Refund Application found here or online at the Cumberland County Tax Bureau website.

Q: Do I need to reapply for tax exemption annually?

Yes, the exemption is good only for one year. Exemption requests for subsequent years must be submitted following the exemption process described previously.

[updated June 2025]