State Taxes

Taxes in Pennsylvania: State Tax Guide 2026

Updated 2026-03-10

Data Notice: Figures, rates, and statistics cited in this article are based on the most recent available data at time of writing and may reflect projections or prior-year figures. Always verify current numbers with official sources before making financial, medical, or educational decisions.

Taxes in Pennsylvania: State Tax Guide 2026

Tax information is for educational purposes only and does not constitute tax advice. Consult a licensed tax professional for your specific situation.

Pennsylvania has one of the lowest flat income tax rates in the nation, but its local income tax system, above-average property taxes, and one of only six state inheritance taxes create a more complex picture than the headline rate suggests.

Pennsylvania Income Tax Rates (2026)

Pennsylvania uses a flat income tax rate:

Tax RateApplies To
3.07%All taxable income

This is one of the lowest flat rates among states with an income tax. Pennsylvania does not allow many of the deductions and exemptions available at the federal level, however, resulting in a broader tax base.

Local Income Taxes (Earned Income Tax)

Pennsylvania is one of the few states where cities and school districts levy their own income taxes:

JurisdictionRate
Philadelphia3.75% (residents) / 3.44% (non-residents)
Pittsburgh3.00% (residents)
Most other municipalities1.0%–2.0%

Combined example: A Philadelphia resident pays 3.07% (state) + 3.75% (city) = 6.82% total income tax rate.

Pennsylvania Deductions and Exemptions

Pennsylvania’s income tax system is notably restrictive:

  • No standard deduction
  • No personal exemptions (for income tax purposes)
  • Limited deductions — Only unreimbursed employee business expenses, some health insurance costs, and a few others
  • Pennsylvania does not conform to many federal deductions

Notable Pennsylvania Tax Credits

  • Tax Forgiveness Credit: Provides partial or full tax forgiveness for lower-income filers (income under ~$35,000 for a family of four)
  • Employment Incentive Payment Credit: For employers hiring certain workers
  • Child and Dependent Care Enhancement: Limited availability
  • Neighborhood Assistance Credit: For contributions to approved community programs

Sales Tax

ComponentRate
State base rate6.00%
Philadelphia rate8.00%
Allegheny County (Pittsburgh)7.00%
Rest of state6.00%

Exempt from sales tax: Most groceries, clothing, textbooks, prescription and OTC medications, and residential heating fuels. Pennsylvania’s clothing exemption is a notable benefit compared to most states.

Property Tax

MetricAmount
Average effective rate1.49%
National average0.99%
Rank among states~12th highest

Property taxes vary significantly across Pennsylvania:

  • Philadelphia: Approximately 1.4% effective rate
  • Pittsburgh area: 1.5%–2.0%+
  • Suburban Philadelphia counties: 1.2%–1.8%

Property Tax Relief

  • Homestead exemption: Varies by school district
  • Property Tax/Rent Rebate Program: Up to ~$1,000 for qualifying seniors (65+), widows/widowers (50+), and disabled persons with household income under ~$45,000
  • School district property tax reduction: Funded by gambling revenue

Inheritance Tax

Pennsylvania is one of six states with an inheritance tax. Rates depend on the heir’s relationship to the deceased:

HeirTax Rate
Surviving spouse0%
Children and lineal descendants4.5%
Siblings12%
All other heirs15%

This tax applies to all assets in the estate with limited exceptions. Life insurance proceeds paid to a named beneficiary are exempt.

How Pennsylvania Compares to National Averages

Tax TypePennsylvaniaNational Average
Income tax rate3.07% (flat)~5.0%
Effective rate (~$75K single)3.07% + local~3.5%
Sales tax6.00%–8.00%6.6%
Property tax (effective)1.49%0.99%
Overall tax burden rankMid-range—

Who Benefits from Living in Pennsylvania

Pennsylvania may work well for:

  • Retirees — All retirement income is completely exempt from state income tax (pensions, 401(k), IRA, Social Security)
  • Workers outside Philadelphia/Pittsburgh — Low state rate of 3.07% with modest local taxes (1%–2%)
  • Shoppers — No sales tax on clothing is a meaningful benefit
  • Lower-income families — The Tax Forgiveness Credit can eliminate state income tax entirely

Pennsylvania may be costly for:

  • Philadelphia residents — Combined 6.82% income tax rate is high
  • Homeowners — Property taxes are well above the national average
  • Heirs — The inheritance tax (4.5%–15%) applies broadly to inherited assets
  • High earners — While the flat 3.07% rate is low, Philadelphia’s local tax and property taxes increase the burden
  • Self-employed — Limited deductions and the local earned income tax create a higher effective burden

Pennsylvania-Specific Considerations

  • All retirement income is exempt — Pennsylvania is one of the most retirement-friendly states for income tax purposes
  • Inheritance tax — Plan for the 4.5% tax on assets passed to children; 12% for siblings; 15% for others
  • No capital gains preference — All capital gains taxed at the flat 3.07% rate (lower than most states)
  • Local Services Tax (LST) — Up to ~$52/year for workers in municipalities that impose it
  • Reciprocal agreements — PA has agreements with Indiana, Maryland, New Jersey, Ohio, Virginia, and West Virginia

Key Takeaways

  • Pennsylvania’s flat 3.07% state income tax rate is among the lowest in the nation
  • Local income taxes (especially Philadelphia’s 3.75%) significantly increase the burden for some residents
  • Property taxes average 1.49%, well above the national average
  • All retirement income is completely exempt from state income tax, making PA very retiree-friendly
  • The inheritance tax (4.5%–15%) is an important estate planning consideration
  • No sales tax on clothing provides ongoing savings for residents

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