Pennsylvania’s state income tax rate remains straightforward for the 2024 tax year (the taxes due in 2025), with a flat rate of 3.07%. This single rate applies to all individuals regardless of their income level, making it one of the simplest tax structures in the country.
If you live in Pennsylvania or earn income there, your state taxes could be easier to calculate compared to states like New York, which have multiple tax brackets with rates that vary significantly based on income.
*Note that you are still responsible for federal taxes if you meet the IRS income filing threshold. This article addresses state-specific taxes only.
Local income tax implications in Pennsylvania
Along with the state’s flat income tax rate, Pennsylvania residents may also face local taxes, depending on where they live or work.
- Philadelphia city wage tax: Philadelphia imposes a 3.75% wage tax on residents and a 3.44% wage tax on nonresidents earning income in the city.
- Pittsburgh earned income tax and local services tax: Pittsburgh levies a 3% earned income tax and a $52 local services tax on individuals working in the city. These taxes fund essential city services.
- Municipal and school district taxes: Many Pennsylvania municipalities and school districts impose additional taxes, which can vary significantly based on location.
Who has to file Pennsylvania state income tax?
Anyone who is a PA resident, part-year resident, or earns taxable income within the state must file a state income tax return if their income exceeds the filing threshold for their status. This includes wages, self-employment income, interest, dividends, and other taxable income sources.
How PA residency impacts tax filing
For Tax purposes, Pennsylvania categorizes individuals into three residency statuses: resident, part-year resident, and nonresident. Each status determines how your income is taxed.
| Residency status | Definition | How Pennsylvania taxes income |
| Resident | Lived in PA all year or considered it their permanent residence | Taxes all income earned or received during the year. |
| Part-year resident | Lived in PA for part of the year. | Taxes income earned while a resident and PA-sourced income. |
| Nonresident | Lived outside PA but earned income within the state. | Taxes only PA-sourced income. |
Other income tax considerations in Pennsylvania
While PA’s flat tax rate keeps things simple, specific types of income have unique tax rules.
- Retirement and pension income: Payments from retirement accounts, like 401(k)s and IRAs are fully exempt. Pension income for seniors age 60 or older are also exempt.
- Investment income: Taxed at 3.07%, including dividends and capital gains.
- Social Security income: Exempt from Pennsylvania state taxes.
- Military income: Military pay (including compensation for weekend drills) earned within and outside Pennsylvania by PA residents is subject to PA personal income tax as compensation. Federal active-duty pay earned outside Pennsylvania is not taxable. Income from active duty for emergencies within Pennsylvania may also qualify for an exemption.
Pennsylvania also imposes an inheritance tax. The tax rate varies depending on the relationship to the decedent, with rates depending on the relationship to the decedent.
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Common PA state tax deductions
Pennsylvania offers state-specific deductions to help reduce your taxable income. While the state doesn’t allow itemized deductions like federal taxes, it does provide four main deduction options:
| Tax deduction | Description | Amount |
| Medical Savings Account (MSA) Contributions | Deduct contributions made to an eligible Medical Savings Account. | Cannot exceed federal contribution limits. |
| Health Savings Account (HSA) Contributions | Deduct contributions to a federally qualified Health Savings Account. | Cannot exceed federal contribution limits. |
| IRC Section 529 Qualified Tuition Program Contributions | Deduct contributions to 529 plans for saving toward future education costs. | Up to the annual federal gift tax exclusion per beneficiary, per taxpayer. |
| IRC Section 529A Pennsylvania ABLE Savings Account Contributions | Deduct contributions to ABLE accounts for disability-related expenses. | Up to the annual federal gift tax exclusion per contributor. |
The state offers limited credit options, but one option is the Resident Credit for Tax Paid to Another State. This allows residents to avoid double taxation on income sourced outside Pennsylvania.
If income is subject to PA personal income tax and another state’s income or wage tax during the same tax year, residents can claim a credit against their Pennsylvania taxes. The allowable credit is the lesser of the tax paid to the other state or the Pennsylvania tax due on the same income, calculated using Pennsylvania’s 3.07% tax rate.
Note that this credit applies only to taxes paid to US states and territories—it does not cover foreign taxes.
How to file Pennsylvania state income tax
Filing your Pennsylvania state taxes doesn’t have to be complicated. With TurboTax, you can get all the guidance you need to file confidently and accurately.
TurboTax helps you get every credit and deduction you qualify for, whether you’re a PA resident, part-year resident, or nonresident. Want a tax expert to handle it for you? TurboTax makes connecting with a local tax expert in Pennsylvania who understands the state’s unique rules easy. Let us handle the hard work so you can keep more of your hard-earned money.
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