Pennsylvania Tax Rates 2026
Income tax, property tax, and estimated take-home pay for Pennsylvania residents.
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Income Tax in Pennsylvania
Pennsylvania has a relatively low state income tax rate of 3.07%, making it more affordable than most states for wage earners.
| Tax Component | Rate / Amount | On $75K Salary |
|---|---|---|
| Federal Income Tax | 10-37% (marginal) | $10,238 |
| Pennsylvania State Tax | 3.07% | $2,302 |
| FICA (SS + Medicare) | 7.65% | $5,738 |
| Total Tax Burden | $18,278 | |
| Annual Take-Home | $56,722 |
Property Tax in Pennsylvania
Pennsylvania's effective property tax rate is 1.53%, which is above the national average of 1.07%. On the national median home value of $405,300, Pennsylvania homeowners pay approximately $6,201 per year ($517/month) in property taxes.
Property tax is deductible on your federal return if you itemize, but the SALT deduction is capped at $10,000 total (combined state income tax + property tax). In Pennsylvania, a $75K earner paying $8,503 in combined state/local taxes stays within the $10,000 SALT cap.
Cost of Living Considerations
Tax rates are only one piece of the puzzle. When comparing Pennsylvania to other states, also consider housing costs, healthcare expenses, grocery prices, and transportation costs. Use our calculators below to model your specific situation.
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Sales Tax in Pennsylvania
Pennsylvania has a state sales tax rate of 6.0%. Local jurisdictions may add additional sales tax on top of the state rate. On a $35,000 vehicle purchase, the state sales tax alone adds $2100. Groceries, prescription medications, and certain essentials may be exempt or taxed at a reduced rate depending on Pennsylvania law. When budgeting for large purchases, always factor in the combined state and local rate in your area.
Tax Planning Tips for Pennsylvania Residents
Max out pre-tax contributions. Every dollar contributed to a 401(k) or traditional IRA reduces both your federal and Pennsylvania state taxable income. A $23,500 401(k) contribution saves you $721 in state taxes alone.
Itemize strategically. If your combined state income tax and property tax exceed $10,000, you are losing deductions to the SALT cap. Consider strategies like bunching charitable deductions or using a donor-advised fund to maximize itemized deductions in alternating years.
Consider municipal bonds. Interest from Pennsylvania municipal bonds is typically exempt from both federal and Pennsylvania state income tax. For investors in the 3.07% bracket, this provides a meaningful after-tax yield advantage over comparable taxable bonds.
Who Benefits from Living in Pennsylvania?
Middle-income families in Pennsylvania face an effective state tax rate of roughly 2.1-3.07%, which is moderate. Families should focus on maximizing deductions and credits available under Pennsylvania law.
Remote workers should verify whether Pennsylvania taxes income based on residence or employer location. This can significantly impact your net pay if your employer is in a different state.
Small business owners in Pennsylvania should explore whether the state offers pass-through entity tax elections, which can help circumvent the $10,000 SALT deduction cap for federal purposes.
Pennsylvania Flat Tax Reality — 3.07% + EIT Patchwork (2,560+ Jurisdictions) 2026
⌄Median Pennsylvania household take-home math
The Flat 3.07% Illusion — How Local EIT Adds Real Money
Pennsylvania's headline flat 3.07% state income tax is the lowest of any flat-tax state in the United States. This rate alone makes PA appear extraordinarily favorable. But the state authorizes municipalities and school districts to levy a local Earned Income Tax (EIT), creating roughly 2,560 distinct local tax jurisdictions. The combined state + local rate ranges from 3.07% (rare zero-EIT areas) to 6.91% (Philadelphia residents) — a 2.25x range within a single state.
| PA Location | Local EIT (Resident) | Combined State + EIT |
|---|---|---|
| Philadelphia (city + school district) | 3.8398% (Wage Tax) | 6.91% (highest in PA) |
| Pittsburgh + School District | 3.00% (2% city + 1% school) | 6.07% |
| Reading / Allentown / Erie | ~2.0%-2.5% | 5.07%-5.57% |
| Suburban Pittsburgh / Philadelphia | 1.0%-2.0% | 4.07%-5.07% |
| Most rural townships | 1.0% (typical) | 4.07% |
| Zero-EIT townships (rare) | 0% | 3.07% (state only) |
PA flat 3.07% per Pennsylvania Department of Revenue. Local EIT structure per Act 32 of 2008. Philadelphia Wage Tax per City of Philadelphia Department of Revenue 2026 schedule. PA ranks #36 on Tax Foundation 2026 State Tax Competitiveness Index.
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PA's Best-In-Class Retirement Income Exemption — A True Retiree Haven
Pennsylvania has arguably the most retiree-friendly income tax structure in the United States. Unlike most states (which tax some or all retirement income), PA exempts virtually all qualified retirement income from state tax: Social Security, 401(k) distributions, IRA withdrawals, pensions (public and private), and military retirement pay. The only state-tax-exposed retirement income is early distributions before age 59½ from non-qualified accounts.
| Retirement Income Source | PA State Tax | Local EIT |
|---|---|---|
| Social Security benefits | Not taxed | Not subject to EIT (not "earned" income) |
| 401(k) / IRA / 403(b) distributions (age 60+) | Not taxed | Not subject to EIT |
| Private pension income | Not taxed | Not subject to EIT |
| Public pension (federal, state, local) | Not taxed | Not subject to EIT |
| Military retirement pay | Not taxed | Not subject to EIT |
| Annuity payments (qualified) | Not taxed (after age 60) | Not subject to EIT |
| Roth IRA withdrawals (qualified) | Not taxed | Not subject to EIT |
PA retirement income exemption per Pennsylvania Department of Revenue Pub. PA-40. Tax treatment of retirement accounts per PA Personal Income Tax Bulletin 2014-03. Multi-state comparison per AARP PA State Tax Guide 2026.
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Philadelphia Wage Tax — The Resident vs Non-Resident Split
Philadelphia operates entirely outside the Act 32 framework that governs the rest of Pennsylvania. The city imposes a Wage Tax with two distinct rates: 3.8398% for residents (regardless of where they work) and 3.4481% for non-residents (only on wages earned within Philadelphia city limits). For a $100K earner, the resident-vs-non-resident gap is approximately $390/year — a meaningful number, especially when paired with suburban property tax differences.
| Philadelphia Worker Profile | Wage Tax Owed (on $100K) | Combined PA + Phila |
|---|---|---|
| Philadelphia resident, works in Philly | $3,840 (3.84%) | $6,910 (6.91%) |
| Philadelphia resident, works in suburbs | $3,840 (3.84%, full resident rate) | $6,910 (6.91%) — no escape |
| Suburban resident, works in Philly | $3,448 (3.45% non-resident) | $6,518 (6.52%) ish |
| Suburban resident, works in suburbs (e.g., 1% EIT) | $0 Phila + $1,000 local | $4,070 (4.07%) |
| Working remotely from outside Philly for Philly employer | $0 (employer-side withholding doesn't apply) | State + own EIT |
Philadelphia Wage Tax 2026 per City of Philadelphia Wage Tax. Resident rate 3.8398%, non-resident 3.4481% effective Q1 2026. Suburban property tax averages per Tax Foundation Property Tax Rankings 2026.
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PA Inheritance Tax — The 0-15% Tier Most Forget About
Unlike most states (which have eliminated inheritance taxes in favor of estate taxes or no death tax at all), Pennsylvania still imposes an inheritance tax at rates that vary by relationship. The tax applies to assets passing from a Pennsylvania decedent to beneficiaries. Spouses pay 0%; lineal descendants and parents pay 4.5%; siblings pay 12%; everyone else pays 15%. Joint property between spouses is exempt.
| Beneficiary Relationship to Decedent | PA Inheritance Tax Rate | What it means |
|---|---|---|
| Surviving spouse | 0% | Fully exempt — no PA inheritance tax |
| Charity (qualified) | 0% | Charitable bequests exempt |
| Lineal descendant (child, grandchild) or parent | 4.5% | Most common case |
| Sibling | 12% | Separate rate for siblings |
| Other (cousin, friend, unrelated) | 15% | Highest tier; applies to most non-family transfers |
PA inheritance tax per PA Department of Revenue Inheritance Tax. Rates per 72 P.S. §9116. Family exemption $30K per 20 Pa.C.S. §3121. Joint property exemption between spouses per 72 P.S. §9111(m).
PA Reciprocity Agreements — Six Border States, Tax-Free Border Crossings
Pennsylvania has tax reciprocity agreements with six border states: Indiana, Maryland, New Jersey, Ohio, Virginia, and West Virginia. Reciprocity means a PA resident working in any of these states (or a resident of those states working in PA) is taxed only by their state of residence on wages — not the state where they work. This eliminates double-taxation for cross-border commuters but does NOT eliminate local EIT or municipal taxes.
| Reciprocity Pair | Tax Treatment | What still applies |
|---|---|---|
| PA resident working in NJ | NJ employer withholds PA tax (3.07%); no NJ tax | PA local EIT still applies based on PA residence |
| NJ resident working in PA | PA employer withholds NJ tax; no PA tax | Philadelphia non-resident Wage Tax (3.45%) STILL applies if work in Philly |
| PA resident working in OH | OH employer withholds PA tax; no OH tax | PA local EIT still applies |
| OH resident working in PA | PA employer withholds OH tax; no PA tax | Philly Wage Tax still applies in city |
| PA resident working in MD | MD withholds PA tax; no MD tax | PA local EIT, plus MD non-resident filing if applicable |
| NY (no reciprocity) | BOTH states tax — PA resident files NY non-resident return; takes credit for NY tax on PA return | Convenience-of-employer rule may apply |
PA reciprocity agreements per PA Form REV-419 Reciprocal Agreement. Philadelphia non-resident exception per City of Philadelphia Code §19-1502. PA reciprocity does NOT include New York, Delaware, or Connecticut.
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Frequently Asked Questions About Pennsylvania Taxes
What is the Pennsylvania state income tax rate for 2026?
How much will I take home on $75K in Pennsylvania?
Does Pennsylvania tax retirement income?
What is the Philadelphia Wage Tax?
What is Pennsylvania's inheritance tax and how does it work?
Does Pennsylvania have tax reciprocity with neighboring states?
What is Pennsylvania's residence rate vs work rate system?
How does Pennsylvania compare to neighboring states for take-home pay?
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