State taxes: Pennsylvania
The Pennsylvania state income tax rate is currently 3.07%. The local income tax ranges from 1% to nearly 4%. In some municipalities, the Local Earned Income Tax is capped at 2%. More on Pennsylvania taxes can be found in the tabbed pages below.
Personal income tax
Pennsylvania has a flat tax rate of 3.07% on individual income, with no personal exemptions.
Pennsylvania taxes 8 classes of income: (1) compensation; (2) interest; (3) dividends; (4) net profits from the operation of a business, profession or farm; (5) net gains or income from the dispositions of property; (6) net gains or income from rents, royalties, patents and copyrights; (7) income derived through estates or trusts; and (8) gambling and lottery winnings other than Pennsylvania Lottery winnings. A loss in 1 class of income may not offset against income in another class, nor may gains or losses be carried backward or forward from year to year.
Pennsylvanians who live on a modest income may qualify for the state’s tax forgiveness credit.
Pennsylvania tax returns are due April 15, or the next business day if that date falls on a weekend or holiday.
Pennsylvania imposes a 6% state sales tax on taxable goods and services.
A local sales tax of 1% is collected on sales of taxable goods and services initiated from a location in Allegheny County.
A local sales tax of 2% is collected on sales and services, except hotel rooms, by vendors located in Philadelphia County.
Personal and real property taxes
Pennsylvania does not levy or collect taxes on real estate or personal property. Those taxes are reserved for the local governments: counties, municipalities and school districts. Usually, all 3 districts levy real estate or property taxes, so you will need to know what county, school district and municipality you live in.
Municipalities (cities, townships and boroughs) are permitted to levy real estate property taxes that cannot exceed 30 mills on the assessed value of the property without special permission of the courts.
The Taxpayer Relief Act provides school districts the opportunity to offer lower property taxes to homeowners by implementing an additional earned income and net profits tax or a personal income tax.
The state’s Property Tax/Rent Rebate program is available to qualified seniors and permanently disabled citizens. It is funded by the Pennsylvania Lottery and administered by the Pennsylvania Department of Revenue. The maximum standard rebate for the amount paid in property taxes or rent in the previous year is $650, but supplemental rebates for qualifying homeowners can boost rebates to $975.
Inheritance and estate taxes
Pennsylvania has an inheritance tax. The tax rate varies depending on the relationship of the heir to the decedent, but it could be as high as 15%.
Pennsylvania had an estate tax based on a decedent’s total gross estate and limited to the credit for state death taxes allowed on the federal estate tax return. However, since the federal credit for state estate tax payments has been phased out, the Keystone State’s estate tax is not imposed.
Other Pennsylvania tax facts
Taxpayers can go online to track the status of their refunds.
The state as well as Pennsylvania counties maintain online information about foreclosures and tax liens in their jurisdictions.
For more information, visit the Pennsylvania Department of Revenue’s website. Residents may also contact the automated FACT and Information Line at (888) 728-2937.
To download tax forms on this site, you will need to install a free copy of Adobe Acrobat Reader. Click here for instructions.