Pennsylvania has a flat 3.07% income tax — one of the lowest rates in the nation, but local taxes can add significantly more.
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
| 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
PA is excellent for retirees:
| 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.
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:
| 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% |
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.