Pennsylvania’s state taxes are moderate: a flat 3.07% income tax, a 6% sales tax with broad exemptions and no tax on retirement income. What surprises many newcomers are the local taxes, especially the wage taxes charged by almost every municipality and school district, and an inheritance tax that most states do not have. Here is how each tax works in 2026.
Where Pennsylvania tax money comes from
Share of state and local tax collections, fiscal year 2023, from the Tax Foundation.
“Individual income” includes local earned income taxes. “Everything else” includes the inheritance tax, realty transfer taxes, fuel taxes and the gross receipts tax on utilities.
State income tax
Pennsylvania taxes income at a flat 3.07%. There is no standard deduction or personal exemption, and contributions to a traditional 401(k) are not deducted from state taxable wages, although contributions to health savings accounts are. Low-income households can get the Tax Forgiveness credit, which reduces or eliminates the tax.
- Not taxed: Social Security, pensions, and IRA and 401(k) distributions after you reach retirement age, as well as unemployment compensation.
- Taxed: wages, business income, interest, dividends and capital gains, all at 3.07%.
Local wage taxes
Most of Pennsylvania’s roughly 2,500 municipalities and 500 school districts levy an earned income tax (EIT) on wages and self-employment income, commonly totaling about 1% to 2%. Your employer withholds the higher of your home municipality’s resident rate or the nonresident rate where you work.
| Place | Resident rate | Nonresident rate |
|---|---|---|
| Philadelphia (Wage Tax, from July 1, 2026) | 3.735% | 3.425% |
| Pittsburgh (city and school district EIT) | 3% | Varies by home municipality |
| Typical suburban or rural municipality | About 1% to 2% | Varies |
Many municipalities also charge a Local Services Tax of up to $52 a year on people who work there, usually withheld in small amounts from each paycheck.
For a single filer earning $75,000 with no pre-tax deductions in 2026:
| Where you live and work | State tax | Local wage tax | Take-home pay |
|---|---|---|---|
| Town with a 1% EIT | $2,303 | $750 | about $58,540 |
| Philadelphia | $2,303 | $2,801 | about $56,490 |
| Compare: Texas or Florida | $0 | $0 | $61,593 |
From our Paycheck Calculator, with the local rate entered. Federal income tax, Social Security and Medicare are the same in every state. The Local Services Tax is not included.
Sales tax
The state rate is 6%. Only two places add a local sales tax: Allegheny County (1%, for 7% total) and Philadelphia (2%, for 8% total). The population-weighted average combined rate is 6.34%, 34th highest of the 50 states and D.C.
- Exempt: most clothing and shoes, groceries, prescription and non-prescription drugs, and residential heating fuel and electricity.
- Taxed: most other goods, restaurant meals, prepared food, and some services such as dry cleaning and lawn care.
- Vehicles: new residents generally owe no Pennsylvania sales tax on a car they owned for at least six months before moving.
See how Pennsylvania compares with every other state in our sales tax by state guide.
Property tax
Pennsylvania has no state property tax. Counties, municipalities and school districts levy it, and school taxes are usually the largest part of the bill. Homeowners pay an effective rate of about 1.26% of home value; at that rate, a home worth the state median of $254,500 pays about $3,200 a year. Rates vary a lot from one school district to the next, so compare before you buy.
- Homestead and farmstead exclusion: state gambling revenue reduces school taxes on a primary residence. Apply to your county assessment office; the usual deadline is March 1.
- Property Tax/Rent Rebate Program: rebates of up to $1,000 a year for eligible homeowners and renters 65 and older, widows and widowers 50 and older, and people with disabilities 18 and older, within the income limits.
- Philadelphia Homestead Exemption: the city reduces the assessed value of an owner-occupied home before calculating the tax.
Other Pennsylvania taxes
| Tax | 2026 rate | Who pays |
|---|---|---|
| Inheritance tax | 0% to a spouse; 4.5% to children, grandchildren and parents; 12% to siblings; 15% to others | Heirs of Pennsylvania residents, and of nonresidents with Pennsylvania real estate |
| Realty transfer tax | 1% state, plus usually 1% local; much higher in Philadelphia | Buyer and seller, by custom split equally |
| Corporate net income tax | 7.49% (falling 0.5 point a year to 4.99% in 2031) | C corporations |
Frequently asked questions
Does Pennsylvania tax retirement income?
No. Social Security, pensions and retirement account withdrawals after retirement age are not subject to the state income tax or local wage taxes.
Why do I pay a local tax on my paycheck?
Most Pennsylvania municipalities and school districts levy an earned income tax on wages. Your employer withholds it based on where you live and where you work.
What is the sales tax in Philadelphia?
8%: the 6% state rate plus a 2% local tax. In Allegheny County, including Pittsburgh, it is 7%.
Do I pay inheritance tax if I inherit from a parent?
Yes, at 4.5% of the value you inherit from a Pennsylvania resident. Paying within three months of the death earns a 5% discount.
Last updated: November 5, 2026.
Sources
- Tax Foundation: Pennsylvania tax data
- Tax Foundation: State and Local Sales Tax Rates, Midyear 2026
- City of Philadelphia: Wage Tax rates
- Pennsylvania Department of Revenue: Personal income, sales, inheritance and realty transfer taxes
- Pennsylvania Department of Revenue: Property Tax/Rent Rebate Program
- Pennsylvania DCED: Local income tax information
- PennDOT: Motor vehicle information for new residents