Calculate your PA state income tax and local EIT
Pennsylvania operates one of the simplest state income tax systems in the United States. With a flat 3.07% tax rate on taxable income, PA doesn't have progressive tax brackets like most states. This means whether you earn $30,000 or $300,000, your state tax rate remains constant at 3.07%.
Pennsylvania is one of only eight states with a flat income tax rate. The 3.07% rate applies uniformly to all taxable income categories:
Pennsylvania is exceptionally generous with retirement income exemptions, making it one of the most tax-friendly states for retirees. The following income sources are completely exempt from PA state income tax:
A Pennsylvania retiree living solely on Social Security ($30,000) and 401(k) distributions ($50,000) would pay $0 in PA state income tax - all $80,000 is tax-exempt. This makes PA highly attractive for retirement compared to states like California (up to 13.3% on retirement income) or New York (up to 10.9%).
In addition to the 3.07% state tax, Pennsylvania municipalities (cities, townships, boroughs) and school districts levy their own Earned Income Tax (EIT). This is where PA's tax system becomes more complex.
The local EIT applies only to earned income (wages, salaries, business income) - not to interest, dividends, capital gains, or retirement income. Rates vary significantly by location:
3.8398%
Highest rate in PA (city wage tax)3.00%
1% city + 2% school district2.00%
Moderate combined rate1.50%
Average PA rate1.84%
0.84% municipality + 1% school district1.65%
Lower than state averageTo find your exact local EIT rate: Visit the PA Department of Community & Economic Development and search your municipality. Your employer typically withholds this automatically, but self-employed individuals must calculate and pay quarterly.
Pennsylvania's local EIT has a unique split for workers who live and work in different municipalities:
Example: You live in Allentown (1.5% EIT) but work in Bethlehem (1.5% EIT). You pay 1% to Allentown (residence) and 0.5% to Bethlehem (work location) - total still 1.5%.
You must file a PA-40 (Personal Income Tax Return) if you meet any of these criteria:
You do NOT need to file a PA return if your only income is from exempt sources (Social Security, retirement distributions, unemployment compensation) - but you may still owe local EIT if you have earned income.
Unlike most states, Pennsylvania does not allow standard deductions or itemized deductions. However, several tax credits can reduce your PA tax liability:
| Tax Credit | Maximum Amount | Eligibility |
|---|---|---|
| Tax Forgiveness Credit | Up to full tax liability | Low-income filers (income under $9,500-$41,000 depending on family size) |
| Educational Improvement Tax Credit (EITC) | 90% of contribution | Businesses contributing to scholarship organizations |
| Organ/Bone Marrow Donor Credit | $5,000 per year | Living organ or bone marrow donors for unreimbursed expenses |
| Disabled Veteran Real Estate Tax Credit | Varies by county | 100% service-connected disabled veterans (property tax exemption, not income tax) |
The PA Tax Forgiveness Credit is designed to eliminate or reduce state income tax for low-income residents. For 2026, eligibility thresholds are:
This credit is automatically calculated when you file PA-40 Form - no separate application required.
| Date | Deadline | What's Due |
|---|---|---|
| April 15, 2026 | Annual Return | PA-40 return for 2025 tax year + final payment |
| April 15, 2026 | Q1 Estimated Tax | First quarter 2026 estimated payment (if self-employed) |
| June 16, 2026 | Q2 Estimated Tax | Second quarter 2026 estimated payment |
| September 15, 2026 | Q3 Estimated Tax | Third quarter 2026 estimated payment |
| October 15, 2026 | Extension Deadline | Final deadline with approved 6-month extension |
| January 15, 2027 | Q4 Estimated Tax | Fourth quarter 2026 estimated payment |
Late filing penalty: 5% of unpaid tax per month (maximum 25%)
Late payment penalty: 0.5% of unpaid tax per month (maximum 25%)
Interest: Variable rate set quarterly (currently around 3% annually)
State tax: 3.07% flat
Local tax: 1-3.84% (average 1.5%)
Total rate: 4.5-7% typical
Retirement income: Tax-free ✅
State tax: 1.4-10.75% progressive
Local tax: None
Total rate: Up to 10.75%
Retirement income: Partially taxed ⚠️
State tax: 4-10.9% progressive
Local tax: NYC adds 3.078-3.876%
Total rate: Up to 14.776% (NYC)
Retirement income: Partially taxed ⚠️
State tax: 2.75-3.5% progressive
Local tax: 0.5-3% (varies widely)
Total rate: 3.25-6.5% typical
Retirement income: Partially exempt ⚠️
State tax: 2-5.75% progressive
Local tax: 2.25-3.2% county tax
Total rate: 4.25-8.95%
Retirement income: Partially taxed ⚠️
Our calculator uses the latest federal and state tax brackets published by the IRS and state revenue departments. We apply standard deductions, personal exemptions, and marginal tax rates for the current tax year.
Results account for filing status, income level, and applicable credits. We update our tax data within 48 hours of any IRS or state announcements. For complex situations (AMT, self-employment, capital gains), consult a licensed CPA.
State tax: 2.2-6.6% progressive
Local tax: None
Total rate: Up to 6.6%
Retirement income: Partially exempt ⚠️
Tax advantage: Pennsylvania's 3.07% state rate is competitive, but local EIT can push total tax burden higher than some neighboring states. However, PA's retirement income exemption makes it one of the best states for retirees in the region.
Pennsylvania has reciprocal income tax agreements with six neighboring states. If you are a resident of one of these states working in Pennsylvania, you do not pay PA income tax on wages:
How it works: File Form REV-419 (Employee's Nonwithholding Application Certificate) with your PA employer to stop PA withholding. You'll pay tax only to your home state.
Important: This applies only to wages from employment. If you earn business income, rental income, or other PA-source income as a non-resident, you still owe PA tax on those amounts.
The rise of remote work has created new tax scenarios for Pennsylvania residents:
Pennsylvania does not have a "convenience of the employer" rule (unlike New York). This means:
If you're self-employed or own a business in Pennsylvania, your tax obligations are more complex:
If you expect to owe more than $8,000 in PA tax for the year, you must make quarterly estimated payments:
Underpayment penalty: If you don't pay at least 90% of your annual tax or 100% of prior year's tax through withholding/estimates, you may owe penalties.
While not income taxes, these are significant Pennsylvania tax obligations:
While PA doesn't allow deductions for retirement contributions (unlike federal taxes), building tax-deferred retirement accounts creates future PA tax-free income. Every dollar in your 401(k) or IRA will be withdrawn tax-free at the state level in retirement.
Pennsylvania taxes interest and dividends at 3.07%, but capital gains on appreciated assets are also taxed. Consider:
If you have flexibility in work location (remote work, multiple offices), working from a municipality with lower EIT can save significantly:
If moving to/from Pennsylvania, timing matters:
Pennsylvania is one of few states with an inheritance tax (separate from estate tax). When you inherit assets from a PA decedent:
| Beneficiary Relationship | Tax Rate |
|---|---|
| Spouse | 0% (exempt) |
| Children, grandchildren, parents | 4.5% |
| Siblings | 12% |
| All other heirs (nieces, nephews, friends) | 15% |
Exemptions: Life insurance proceeds, retirement accounts passing to spouse, and property left to charities are exempt from PA inheritance tax.
This is not income tax: Inherited money is not taxable income for PA purposes - you pay the one-time inheritance tax when you receive the asset, then it's yours tax-free.
Pennsylvania has a flat income tax rate of 3.07% for 2026. This rate applies to all taxable income regardless of filing status or income level. PA is one of only eight states with a flat tax structure.
Pennsylvania exempts several income sources from state tax:
Note: While exempt from state tax, some income (like wages) may still be subject to local Earned Income Tax (EIT).
Pennsylvania local Earned Income Tax (EIT) is a municipal tax levied by cities, townships, boroughs, and school districts. Rates typically range from 1% to 3.8398% depending on location. Philadelphia has the highest rate at 3.8398% (city wage tax). Pittsburgh's combined rate is 3.00%.
EIT applies only to wages, salaries, and business income - not to retirement income, interest, or dividends. Your employer typically withholds this tax automatically.
If you are a Pennsylvania resident working remotely for an out-of-state employer, you must pay PA state income tax (3.07%) on your wages because the work is performed in Pennsylvania. You may also owe local EIT to your municipality.
However, PA has reciprocal agreements with Indiana, Maryland, New Jersey, Ohio, Virginia, and West Virginia. Residents of those states working in PA do not pay PA tax on wages - they pay only to their home state.
No. Pennsylvania is one of the most tax-friendly states for retirees. Social Security benefits are 100% exempt from PA state income tax, regardless of your income level. This exemption also extends to all retirement account distributions (401k, IRA, pensions).
To find your specific local Earned Income Tax rate:
Alternatively, check your pay stub - your employer should be withholding local EIT and it will be itemized there.
No. Pennsylvania does not allow standard deductions or itemized deductions. The 3.07% tax rate applies directly to your taxable income without any adjustments for deductions (except specific exemptions like retirement income).
This differs from federal taxes, where you can claim a standard deduction ($14,600 for singles in 2026). At the state level, PA taxes gross income minus exempt categories.
Pennsylvania tax returns and payments are due on April 15, 2026 for the 2025 tax year (same as federal deadline). If you file for an extension, your return is due by October 15, 2026, but any tax owed must still be paid by April 15 to avoid penalties.
Self-employed individuals must also make quarterly estimated tax payments on April 15, June 16, September 15, and January 15.
No. Pennsylvania does not allow itemized deductions, including mortgage interest, property taxes, or charitable contributions. These deductions apply only on your federal return.
PA taxes your income at a flat 3.07% without any deductions - it's a much simpler system than federal taxes, but offers fewer opportunities to reduce your tax bill through deductions.