Navigating the complexities of state taxes can be daunting, but understanding Pennsylvania's tax landscape is essential for residents and newcomers alike.
In this guide, we'll explore key components of The Keystone State's tax system, from income and sales taxes to property taxes and retirement benefits.
Pennsylvania tax: Overview
Pennsylvania’s tax landscape has a little bit of everything.
Some taxes, like those on gas and property, are higher than what you'd find in many other states. The state’s flat income tax is relatively low, though local governments can add their own income taxes on top.
Sales tax falls somewhere in the middle, and many common items are exempt, which helps soften the impact.
And for those who enjoy a cold beer, there’s a small win; Pennsylvania has one of the lowest beer taxes in the country.
Here's more to know.
[Data for this state tax guide was gathered from several sources including the U.S. Census Bureau, the state’s government website, the Sales Tax Handbook, and the Tax Foundation. Property taxes are cited as a rate percentage rather than the assessed value.]
Pennsylvania income tax
Pennsylvania has a flat rate of 3.07%.
Municipalities and school districts can also impose taxes on wages or income.
Pennsylvania retirement taxes
Pennsylvania tax on retirement benefits: Social Security and Railroad Retirement benefits are not taxed by the state. Income from private employer, government, and military retirement plans paid after the taxpayer becomes eligible to retire is tax-exempt.
Pennsylvania doesn’t tax any traditional types of retirement income.
Even other types of income are taxed at a low flat rate, but localities in Pennsylvania can impose local income taxes of their own.
- Tax on Taxable Income: Flat rate of 3.07%
- Social Security: Not taxable
- Pensions: Not taxable
- 401(k) and IRA Distributions: Not taxable
Pennsylvania sales tax
Pennsylvania's statewide sales tax rate is 6%, and localities can add up to 2%, according to the Sales Tax Handbook.
- Groceries: Exempt
- Prescription drugs: Exempt
- Diapers and some feminine hygiene products: Exempt
How much are property taxes in Pennsylvania?
In Pennsylvania, the average effective property tax rate is 1.19%, which is higher than in most other states.
Pennsylvania Property Tax Breaks for Retirees
Pennsylvania Property Tax and Rent Rebates: Some homeowners and renters 65 or older may be eligible for property tax or rent rebates through the Property Tax/Rent Rebate Program.
To qualify, residents must meet income guidelines and apply for the rebate.
(Note: Widows and widowers 50 and older and people with disabilities age 18 and older may also qualify for a rebate.)
Pennsylvania gas tax
Gasoline: $0.50 per gallon
Diesel: $0.64 per gallon
Pennsylvania Alcohol and Tobacco Taxes
Product |
Tax amount |
|---|---|
Cigarettes |
$2.60 per pack |
Medical marijuana |
5% state cannabis excise tax |
Source: Sales Tax Handbook
Product |
Tax amount |
|---|---|
Wine |
$0 per gallon |
Beer |
$0.08 per gallon |
Liquor |
state-controlled |
Source: Sales Tax Handbook
(Note: Sales tax and local taxes may apply to alcohol and tobacco purchases.)
Pennsylvania estate and inheritance taxes
Pennsylvania's inheritance tax ranges from 0% to 15%.
Spouses and parents inheriting property from a child 21 are younger are exempt from paying the tax.
Other direct descendants may need to pay a 4.5% tax rate, and siblings are subject to a 12% rate.
Unrelated heirs pay a 15% inheritance tax in Pennsylvania (with some exceptions).
