Pennsylvania has a flat 3.07% income tax — one of the lowest rates in the nation, but local taxes can add significantly more.
The Keystone State’s flat tax system is straightforward: everyone pays the same 3.07% rate regardless of income. This simplicity is unusual compared to most states’ progressive systems, and it’s particularly advantageous for high earners. However, Pennsylvania’s lack of deductions and local earned income taxes (especially in Philadelphia) complicate the picture. Let’s break down what you’ll actually pay.
Pennsylvania Tax Rate 2026
| Tax Type | Rate |
|---|---|
| State income tax | 3.07% (flat) |
| Local earned income tax | 1-4% (varies) |
| Philadelphia wage tax | 3.75% (residents) |
How Pennsylvania Flat Tax Works
| Taxable Income | State Tax | Effective Rate |
|---|---|---|
| $25,000 | $768 | 3.07% |
| $50,000 | $1,535 | 3.07% |
| $75,000 | $2,303 | 3.07% |
| $100,000 | $3,070 | 3.07% |
| $150,000 | $4,605 | 3.07% |
| $200,000 | $6,140 | 3.07% |
| $500,000 | $15,350 | 3.07% |
Pennsylvania vs. Neighboring States
One of Pennsylvania’s biggest tax advantages is geographic: it’s surrounded by high-tax states. Someone earning $200,000 in New York City would pay around $17,000 in state income tax alone—compared to just $6,140 in Pennsylvania. This makes PA attractive for remote workers who can earn NYC or Philly salaries while living in lower-cost areas. See our full state income tax rates comparison for details.
| State | Top Rate | Type |
|---|---|---|
| New York | 10.9% | Progressive |
| New Jersey | 10.75% | Progressive |
| Maryland | 5.75% | Progressive |
| Delaware | 6.6% | Progressive |
| Ohio | 3.5% | Flat (2026) |
| West Virginia | 5.12% | Progressive |
| Pennsylvania | 3.07% | Flat |
PA has the lowest rate in the region.
Pennsylvania Local Taxes (EIT)
Pennsylvania allows municipalities to levy earned income taxes:
Local Tax Rates by Area
| Municipality | Rate |
|---|---|
| Philadelphia (residents) | 3.75% |
| Philadelphia (non-residents) | 3.44% |
| Pittsburgh | 3% |
| Scranton | 3.4% |
| Allentown | 1.75% |
| Reading | 3.6% |
| Bethlehem | 1% |
| Most suburban areas | 1-2% |
| Rural areas | 0.5-1.5% |
Total Tax Example (Philadelphia)
| Component | Rate |
|---|---|
| State tax | 3.07% |
| Philadelphia wage tax | 3.75% |
| Total | 6.82% |
Pennsylvania School District Tax
Many PA school districts levy an additional Earned Income Tax (EIT) on top of municipal tax:
| School District Type | Additional Rate |
|---|---|
| Most districts | 0.5% |
| Some districts | 1% |
Check your school district — this stacks with local and state taxes.
Pennsylvania Retirement Income
This is Pennsylvania’s crown jewel for tax planning. PA is excellent for retirees because it completely exempts retirement income from state tax. Social Security benefits, pensions, 401(k) withdrawals, IRA distributions—all untaxed at the state level regardless of your age or total income. Combined with the already-low 3.07% flat rate on other income, Pennsylvania ranks among the most tax-friendly states for retirement.
| Income Source | Pennsylvania Tax |
|---|---|
| Social Security | Not taxed |
| 401(k)/403(b) withdrawals | Not taxed |
| Traditional IRA | Not taxed |
| Pension (all types) | Not taxed |
| Roth distributions | Not taxed |
| Military retirement | Not taxed |
Pennsylvania completely exempts retirement income regardless of your age. This means a retiree living on Social Security plus 401(k) withdrawals could pay $0 in Pennsylvania state income tax—even with six-figure retirement income. If you’re planning retirement, see our guide on 401(k) contribution limits to maximize your pre-tax savings now.
What Pennsylvania DOES Tax
| Income Type | Taxable? |
|---|---|
| Wages/salaries | Yes |
| Self-employment income | Yes |
| Business income | Yes |
| Interest | Yes |
| Dividends | Yes |
| Capital gains | Yes |
| Rental income | Yes |
| Gambling winnings | Yes |
Pennsylvania Does NOT Allow
Unlike most states, Pennsylvania:
- No standard deduction
- No personal exemption
- No itemized deductions
- No deduction for retirement contributions
You pay 3.07% on gross taxable income (not adjusted gross income).
Pennsylvania Tax Classes
PA taxes eight classes of income separately:
| Class | Type |
|---|---|
| 1 | Compensation (wages, salaries) |
| 2 | Net profits (business) |
| 3 | Interest |
| 4 | Dividends |
| 5 | Net gains from property sales |
| 6 | Rents and royalties |
| 7 | Estate/trust income |
| 8 | Gambling/lottery |
You cannot offset losses in one class against gains in another.
Pennsylvania Capital Gains Tax
PA taxes capital gains at the flat 3.07% rate—significantly below the federal capital gains tax rates of 15-20% for long-term gains. There’s no distinction between short-term and long-term holdings at the state level.
| Federal Treatment | PA Treatment |
|---|---|
| Short-term gains | 3.07% |
| Long-term gains | 3.07% |
No distinction between short and long-term — both taxed the same.
Pennsylvania Property Tax
| Metric | Pennsylvania |
|---|---|
| Average effective rate | 1.36% |
| National rank | 11th highest |
| On $300,000 home | ~$4,080 |
Property Tax by County
| County | Average Rate |
|---|---|
| Monroe | 1.87% |
| Luzerne | 1.84% |
| Delaware | 1.83% |
| Berks | 1.79% |
| Allegheny (Pittsburgh) | 1.62% |
| Philadelphia | 1.36% |
| Chester | 1.25% |
Pennsylvania Sales Tax
| Type | Rate |
|---|---|
| State sales tax | 6% |
| Philadelphia | +2% = 8% |
| Allegheny County | +1% = 7% |
| Most other areas | 6% |
Pennsylvania’s sales tax is notable for what it doesn’t tax: groceries and most clothing are exempt. This is a meaningful benefit for families — you’ll pay 6-8% on electronics and restaurant meals, but your weekly grocery run and kids’ clothes are tax-free.
Sales Tax Exemptions
| Item | Exempt? |
|---|---|
| Most food (groceries) | Yes |
| Most clothing | Yes |
| Prescription drugs | Yes |
| Restaurant meals | No |
| Electronics | No |
PA exempts groceries and most clothing from sales tax.
Who Must File Pennsylvania Taxes?
You must file if you:
- Had PA source income
- Were a PA resident
- Were a part-year resident
No minimum income threshold — if you had taxable income, you file.
Pennsylvania Tax Credits
| Credit | Details |
|---|---|
| Tax Forgiveness Credit | Low-income credit |
| Local Tax Credit | Avoid double local taxation |
| PA 529 Credit | Not available |
Tax Forgiveness
PA offers “Tax Forgiveness” for low-income filers:
| Filing Status | Forgiveness Threshold |
|---|---|
| Single | $6,500 |
| Each dependent | +$9,500 |
| Married | $13,000 |
Partial forgiveness available above thresholds.
Pennsylvania vs. Other Low-Tax States
| State | Income Tax | Property Tax |
|---|---|---|
| Pennsylvania | 3.07% | 1.36% |
| Indiana | 3.05% | 0.75% |
| Arizona | 2.5% | 0.51% |
| North Dakota | 1.95% | 0.98% |
| Colorado | 4.4% | 0.49% |
PA has low income tax but higher property tax.
Pennsylvania Filing Options
| Method | Cost |
|---|---|
| PA e-File | Free |
| myPATH | Free |
| Commercial software | $0-$50 |
| Tax professional | $100-$250 |
Filing deadline: April 15
Pennsylvania Business Taxes
| Tax | Rate |
|---|---|
| Corporate net income tax | 8.99% (declining) |
| Net profits (pass-through) | 3.07% |
| Gross receipts tax | Varies by business |
PA is lowering corporate tax to 4.99% by 2031.
Moving to Pennsylvania
Good for:
- Retirees (no retirement income tax)
- High earners from NY/NJ (much lower rate)
- Those avoiding Philadelphia local tax
Less favorable for:
- Low earners (no deductions to reduce tax)
- Philadelphia residents (6.82% total)
- Those in high property tax counties
Bottom Line
Pennsylvania has a flat 3.07% income tax — one of the lowest state rates. However, local earned income taxes (up to 3.75% in Philadelphia) can significantly increase your burden. The major benefit is no taxation of retirement income — making PA one of the best states for retirees. Property taxes (1.36% average) are higher than average but lower than neighbors like New Jersey.
Pennsylvania is best for:
- Retirees (complete exemption of retirement income)
- High earners fleeing NY/NJ (saves thousands annually)
- Those in suburban/rural areas (low local taxes)
Less favorable for:
- Philadelphia residents (6.82% combined income tax)
- Low earners who’d benefit from deductions
- Homeowners in high-property-tax counties
For a full comparison of how Pennsylvania stacks up nationally, see our state income tax rates guide and our cost of living by state comparison.
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