Pennsylvania Flat Tax Rate
Pennsylvania's flat rate of 3.07% is the second-lowest flat rate among states with income taxes, behind only North Dakota (1.95% top rate) and close to Indiana (3.05%). The simplicity of the flat rate makes calculating PA tax straightforward — multiply your taxable income by 0.0307.
| Gross Income | PA State Tax (3.07%) | Effective Rate |
|---|---|---|
| $40,000 | $1,228 | 3.07% |
| $65,000 | $1,996 | 3.07% |
| $100,000 | $3,070 | 3.07% |
| $150,000 | $4,605 | 3.07% |
Since there are no deductions or exemptions in PA, the effective rate is essentially 3.07% for all workers. The only exceptions are retirement income (fully exempt) and certain other exclusions.
Pennsylvania Local Income Taxes
Pennsylvania is unique among states in allowing extensive local income taxation. Municipalities and school districts can impose their own earned income taxes (EIT), which are in addition to the 3.07% state rate. This means your total income tax in PA depends heavily on where you live.
| Location | State Rate | Local Rate | Combined Rate |
|---|---|---|---|
| Philadelphia (resident) | 3.07% | 3.75% | 6.82% |
| Pittsburgh (resident) | 3.07% | 3.00% | 6.07% |
| Typical suburb | 3.07% | 1.0-1.5% | 4.07-4.57% |
| Rural PA | 3.07% | 0.5-1.0% | 3.57-4.07% |
Philadelphia's combined rate of 6.82% is particularly notable — it is higher than many progressive states' effective rates for moderate-income earners. Philadelphia nonresidents who work in the city pay 3.44% in city wage tax rather than the 3.75% resident rate.
Pennsylvania Retirement Income Exemption
Pennsylvania is one of the best states for retirees from a tax perspective. The following types of retirement income are completely exempt from PA state income tax: Social Security benefits, distributions from employer-sponsored retirement plans (401(k), 403(b), 457), distributions from IRAs (traditional and Roth), pension and annuity income, and Railroad Retirement benefits.
This means a retiree living in a PA suburb with $60,000 in pension income and $25,000 in Social Security would owe $0 in Pennsylvania state income tax. Combined with moderate property taxes (averaging about 1.5%) and no local income tax in many suburban areas, PA can be extremely tax-efficient for retirees.
Comparison: PA Worker vs PA Retiree
| Scenario | Income | PA State Tax | Local Tax (avg suburb) | Total |
|---|---|---|---|---|
| Worker, $75K salary | $75,000 | $2,303 | $938 | $3,241 |
| Retiree, $75K pension+SS | $75,000 | $0 | $0 | $0 |
The contrast is dramatic. A worker earning $75,000 pays over $3,200 in combined state and local taxes, while a retiree with the same income pays nothing. This makes Pennsylvania one of the most recommended states for tax-efficient retirement.
Pennsylvania Income Tax Overview
This state applies its flat income tax rate uniformly across all taxable income levels. The standard deduction is the first deduction applied.
The standard deduction directly reduces your taxable income before the flat rate is applied. The state sales tax rate is 6% (avg combined 6.3%), which applies to most goods and some services depending on local laws. Property taxes in Pennsylvania average approximately 1.53% of home value. For context, the national average property tax rate is roughly 1.1%. Residents should check their city and county rates, as local add-ons can significantly increase the combined sales tax rate above the state base rate.
Compared to neighboring states — New York (10.9%), New Jersey (10.75%), Delaware (2.2-6.6%), Maryland (5.75%), West Virginia (6.5%), Ohio (3.5%) — Pennsylvania offers a distinct balance of rates, deductions, and available credits that can significantly impact your total tax burden. For retirement income: SS, 401(k), IRA, pensions all tax-free. PA has local earned income taxes in many municipalities. Pennsylvania does not offer a standard deduction, so your federal adjusted gross income is generally the starting point for state tax calculation. The state relies on personal exemptions or credits instead. The annual filing deadline for state income tax returns is April 15, matching the federal deadline. Taxpayers who cannot file by the deadline can request an automatic six-month extension, though any tax owed must still be paid by April 15 to avoid interest and penalty charges. Self-employed individuals, recent movers, and retirees with complex income sources should consult a qualified tax professional for personalized guidance.
Frequently Asked Questions
Pennsylvania has a flat income tax rate of 3.07%. This is one of the lowest flat rates in the nation. All taxable income is taxed at this single rate regardless of amount.
Pennsylvania does not tax most retirement income. Distributions from 401(k) plans, IRAs, pensions, and Social Security are all exempt from PA state income tax. This makes Pennsylvania one of the most tax-friendly states for retirees.
Yes. Pennsylvania is unique in that it allows local governments (municipalities and school districts) to impose their own earned income taxes. The Philadelphia city wage tax is 3.75% for residents. Other municipalities charge between 0.5% and 3%. These local taxes are in addition to the 3.07% state rate.
No. Pennsylvania does not offer a standard deduction or personal exemptions. The 3.07% rate applies to all eight classes of taxable income defined by PA law.
Pennsylvania taxes eight classes of income: compensation (wages, salaries, tips), net profits from business, interest, dividends, rental income, estate or trust income, gambling winnings, and capital gains on the sale of property. Notably, PA does not distinguish between short-term and long-term capital gains.
The Philadelphia wage tax and other local earned income taxes paid in Pennsylvania are deductible on your federal return if you itemize, as part of the SALT deduction (up to the $40,000 cap).
Pennsylvania uses Flat 3.07% system. The standard deduction is None.
SS, 401(k), IRA, pensions all tax-free
