Pennsylvania law requires withholding at a rate of 3.07 percent on non-wage Pennsylvania source income payments made to nonresidents. Pennsylvania businesses are now required to withhold and report on compensatory payments to nonemployee Directors who do not reside in Pennsylvania.The Wage Tax must be filed quarterly and paid on a schedule that corresponds with how much money is withheld from employees' paychecks. What is Pennsylvania's 1099-MISC filing requirement? If you have tax forgiveness under PA 40 Schedule SP, you may be eligible for an income-based Wage Tax refund. Pennsylvania taxes all the compensation of a resident individual regardless of where it is earned. (3) The deduction shall not result in the contributor's taxable income being less than zero.