Data Notice: The Pennsylvania tax information in this article reflects projected 2026 rates and thresholds. State tax law is subject to legislative revision. Confirm current rates with Pennsylvania’s official tax authority before making filing decisions. [taxes-pennsylvania-2026]

Taxes in Pennsylvania: State Tax Guide 2026

Tax information in this article on taxes in pennsylvania: state tax guide 2026 is for educational purposes only and does not constitute tax, legal, or financial advice. Tax laws change, and individual circumstances vary. Consult a qualified tax professional or CPA for guidance specific to your 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 Rate	Applies 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:

Jurisdiction	Rate
Philadelphia	3.75% (residents) / 3.44% (non-residents)
Pittsburgh	3.00% (residents)
Most other municipalities	1.0%–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

Component	Rate
State base rate	6.00%
Philadelphia rate	8.00%
Allegheny County (Pittsburgh)	7.00%
Rest of state	6.00%

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

Metric	Amount
Average effective rate	1.49%
National average	0.99%
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:

Heir	Tax Rate
Surviving spouse	0%
Children and lineal descendants	4.5%
Siblings	12%
All other heirs	15%

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 Type	Pennsylvania	National Average
Income tax rate	3.07% (flat)	~5.0%
Effective rate (~$75K single)	3.07% + local	~3.5%
Sales tax	6.00%–8.00%	6.6%
Property tax (effective)	1.49%	0.99%
Overall tax burden rank	Mid-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

Next Steps

Compare Pennsylvania to other states at State Income Tax Comparison: All 50 States Ranked
Calculate your federal taxes with the Tax Bracket Calculator 2026
Planning for inheritance? See Estate and Inheritance Tax Guide 2026
Retiring in PA? Review Federal Income Tax Guide 2026: Brackets, Rates, and Changes
Find a Pennsylvania CPA — Find a CPA Near You

Sources

Tax Foundation, 2026 State Income Tax Rates and Brackets — Pennsylvania flat income tax rate and local tax structure.
IRS Publication 559, Survivors, Executors, and Administrators — estate and inheritance tax guidance relevant to PA’s inheritance tax.