Pennsylvania State Income Tax Calculator
Pennsylvania keeps it simple with a 3.07% flat tax rate on all taxable income. No complex brackets - everyone pays the same percentage. Major benefit for retirees: PA does NOT tax Social Security, pensions, IRA withdrawals, or 401(k) distributions. Also no tax on capital gains. This makes PA one of the best states for retirees despite having income tax. Note: Some PA localities add 1-3% local income tax.
What is Pennsylvania state income tax rate for 2026?
Pennsylvania has a simple FLAT income tax rate of 3.07% on all taxable income. Unlike most states with progressive brackets, PA taxes everyone at the same rate regardless of income. Whether you earn $30,000 or $300,000, you pay 3.07%. This makes PA calculations very simple. The rate has remained stable for years (3.07% since 2004). PA is one of only 9 states with flat tax rates. This simplicity is attractive to both individuals and businesses.
Does Pennsylvania tax retirement income and Social Security?
Great news for retirees: Pennsylvania does NOT tax retirement income! Exempt from PA tax: Social Security benefits (100% tax-free), Pension income (government and private - fully exempt), IRA withdrawals (traditional and Roth - exempt), 401(k)/403(b) distributions (exempt), Annuity income (exempt). This makes PA one of the most retiree-friendly states for taxes, despite having income tax. Only 14 states fully exempt retirement income. Combined with low 3.07% rate on any other income (like part-time work), PA is excellent for retirees. Many retirees move TO Pennsylvania for this benefit.
What income is taxable in Pennsylvania?
PA taxes 8 classes of income: Compensation (wages, salaries, bonuses, tips), Interest income (from banks, bonds), Dividends (from stocks, investments), Net profit from business, Net gain from sale of property, Rent/royalty income, Estate/trust income, Gambling/lottery winnings. Exempt: Retirement income (SS, pensions, IRAs), Capital gains (NOT taxed by PA!), Military pay (exempt for active duty), Certain farm income. PA has no standard deduction or personal exemptions - the 3.07% applies to all taxable income. However, capital gains exemption is HUGE benefit for investors.
How does Pennsylvania tax compare to other states?
PA (3.07% flat) comparison: Lower than progressive states: CA (up to 13.3%), NY (up to 10.9%), NJ (up to 10.75%). Similar to flat-tax states: Illinois (4.95%), Indiana (3.15%), Michigan (4.25%). Higher than no-tax states: FL, TX, WA (0%). PA advantages: Very low rate, simple flat tax, NO tax on retirement income, NO capital gains tax, NO inheritance tax on direct descendants. PA disadvantages: All wage income taxed (no standard deduction), local taxes can add 1-3%, high property taxes. Overall, PA is middle-of-road for workers but EXCELLENT for retirees and investors.