LST on a W-2 stands for Local Services Tax, a flat Pennsylvania payroll tax capped at $52 per person per calendar year. If you see it on your W-2, you worked in a Pennsylvania municipality that levies the tax, and your employer withheld small amounts from each paycheck to cover it. The label appears because Pennsylvania is the only state with this tax.
Where to Find LST on Your W-2
Starting with the 2026 tax year, the IRS split the old Box 14 into Box 14a (Other) and Box 14b (Treasury Tipped Occupation Codes). Most employers report the LST in Box 14a, the catch-all space for tax information that doesn’t fit elsewhere on the form.1Internal Revenue Service. General Instructions for Forms W-2 and W-3 (2026) Some payroll systems put it in Box 19 instead, which is designated for local income tax data.
The label your employer uses depends on the payroll software. You might see “LST,” “Local Serv,” “PA LST,” or the name of the municipality that received the money. Whatever the wording, the dollar figure beside it is the total withheld from your paychecks during the year for this tax.
Why It Was Withheld From Your Pay
The Local Services Tax is based on where you work, not where you live. Pennsylvania applies a “situs” rule: if the combined municipal and school district LST rate exceeds $10, the tax attaches at your place of employment on the first day you work during each payroll period. If the combined rate is $10 or less, the situs is your place of employment on the first day you work during the calendar year.2Commonwealth of Pennsylvania. Local Services Tax (LST) You can live somewhere that doesn’t levy the tax and still owe it because your office sits in a municipality that does.
Employers spread the annual amount across pay periods. At the $52 maximum, that works out to $1 per week for weekly paychecks or about $4.33 per month for monthly ones.2Commonwealth of Pennsylvania. Local Services Tax (LST) A total combined rate below $52 means smaller per-period withholdings.
The $52 Annual Cap and Multiple Jobs
The $52 ceiling is per person per year, not per employer. If you held more than one job in Pennsylvania during the year, you should not have paid the LST more than once in any single payroll period, and your total for the year is still capped at $52 no matter how many employers or municipalities were involved.2Commonwealth of Pennsylvania. Local Services Tax (LST)
To prevent double withholding going forward, give your secondary employer a pay stub from your primary employer showing that LST is already being withheld, together with a completed employee statement of principal employment. Once you do, the secondary employer is not required to withhold the tax.2Commonwealth of Pennsylvania. Local Services Tax (LST) If the withholding has already happened, you can recover the excess through a refund request.
Exemptions That Would Have Zeroed Out the LST
Two exemptions exist. Certificates expire at the end of each calendar year, so a new one must be filed every January to keep the exemption in force. Filing before your first paycheck of the year stops withholding at the source.
Low-Income Exemption
Any municipality that levies the LST at a combined rate above $10 is required to exempt workers whose total earned income and net profits from all sources within that municipality are less than $12,000 for the calendar year. Municipalities with a combined rate of $10 or less may offer the same exemption but are not required to.2Commonwealth of Pennsylvania. Local Services Tax (LST) The $12,000 figure counts income from every employer and any self-employment earnings inside that municipality, not just the paycheck the LST was pulled from.3Commonwealth of Pennsylvania. Local Withholding Tax FAQs
To claim it, complete an Application for Exemption from Local Services Tax and attach supporting documentation, such as a recent pay stub or the prior year’s W-2. Submit the form to your employer and to the municipality where you work.
Military Exemption
The military exemption covers two groups: members of a reserve component of the armed forces called to active duty, and honorably discharged veterans who served in any war or armed conflict and are blind, paraplegic, a double or quadruple amputee as a result of military service, or 100 percent disabled from a service-connected disability.2Commonwealth of Pennsylvania. Local Services Tax (LST) Prior military service on its own does not qualify.
How to Get a Refund If Too Much Was Withheld
If your W-2 shows more than $52 in LST, or if you qualified for an exemption but didn’t file the certificate in time, request a refund using the Application for Refund from Local Services Tax. The form is available from your local tax collector or the Pennsylvania Department of Community and Economic Development.
What you need to attach depends on the reason:
- Multiple employers: a pay stub from your principal employer showing the employer’s name, the payroll period length, and the amount of LST withheld.
- Low-income exemption: proof that your total earned income within the municipality was below $12,000, such as your W-2 or final pay stub for the year.
- Military exemption: official documentation of your reserve activation or service-connected disability rating.
Many Pennsylvania municipalities use third-party collectors such as Berkheimer or Keystone Collections to administer the LST. Your W-2 or your employer’s payroll department can tell you which agency collects the tax in your work municipality, and that is where the refund application goes. You can also look up the designated collector through the Pennsylvania Department of Community and Economic Development.4Commonwealth of Pennsylvania. Local Income Tax Collector
Can You Deduct the LST on Your Federal Return
The answer is not clear-cut. The LST is a flat per-person tax rather than a tax based on income, so it does not obviously belong in the “state and local income taxes” category on Schedule A. The IRS instructions for Schedule A do not specifically address the Local Services Tax as either deductible or non-deductible.5Internal Revenue Service. Instructions for Schedule A (Form 1040) The maximum at stake is $52, so the effect on a federal return is small either way. If you itemize and want to claim it, a tax professional can advise on your specific situation.
For 2026, the overall cap on the federal deduction for state and local taxes is $40,400 for most filers, or $20,200 if married filing separately. Even if the LST qualifies, it would count against that limit along with the rest of your state and local tax deductions.