Pennsylvania State Taxes: What You’ll Pay In 2026

Pennsylvania has a flat state income tax of 3.07 percent, but local municipalities can impose their own income taxes, which increases the tax burden for its residents. Pennsylvania also has a law that may require remote employees from out of state to pay state income tax in Pennsylvania if the business is based in the state. This can lead to double taxation for those workers, according to the Tax Foundation.

The big picture:

• Income tax: Pennsylvania has a flat individual income tax rate of 3.07 percent, assessed on net income, which is defined as total wages and other income, less any standard or itemized deductions. Additionally, most municipalities levy local income taxes.
• Property tax: The effective property tax rate for Pennsylvania was 1.26 percent of a home’s assessed value, although the actual rate varies by county, according to the most recent data from the Tax Foundation.
• Sales tax: Statewide, the sales tax is 6 percent. Allegheny County imposes an additional 1 percent sales tax, and Philadelphia imposes an additional 2 percent sales tax.

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How is income taxed?

Pennsylvania has a flat state income tax of 3.07 percent, but local municipalities can impose their own income taxes. The highest local taxes are 3.75 percent in Chester City and 3.74 percent in Philadelphia. Use this state database to find tax information about your municipality.

What about investment income?

Pennsylvania has different laws in place than the federal government for taxing investment income, which can include interest, dividends, net gains from the sale of stock or real estate, and rental and royalty income. All are taxed at the state’s personal income tax rate of 3.07 percent. Municipalities do not tax investment income.

Are Social Security benefits taxed?

Retirement income, including Social Security, is not taxed in Pennsylvania. However, residents may owe federal taxes on this income. More details on federal taxation of Social Security are available here.

How is property taxed?

Property tax rates are based on a home’s assessed value and vary by county. They range from 0.79 percent in Bedford County to 1.62 percent in Delaware County and Monroe County. The median property taxes paid ranged from $1,145 in Forest County to $6,308 in Chester County, according to the Tax Foundation.

What about sales and other taxes?

• Sales tax: Statewide, the sales tax is 6 percent, although Allegheny County imposes an additional 1 percent sales tax, and Philadelphia imposes an additional 2 percent sales tax. Sales tax exemptions include most groceries, candy and gum, most clothing, pharmaceutical drugs and residential heating fuels. A full list of exempt items can be found here.
• Gas and diesel: Gasoline is taxed at 57.6 cents per gallon. Diesel is taxed at 74.1 cents per gallon.
• Vehicle tax: Vehicle purchases are taxed at 6 percent, except for a tax of 7 percent for vehicles registered in Allegheny County and 8 percent for those registered in Philadelphia.
• Alcohol: Liquor sold through the state’s Liquor Control Board outlets is subject to an 18 percent tax that the consumer pays. The tax is included in the shelf price. In addition, consumers pay sales tax of 6 percent (7 percent in Allegheny County and 8 percent in Philadelphia).
• Lottery: Lottery winnings are subject to the state’s 3.07 percent income tax, plus federal tax. Pennsylvania will automatically withhold state personal income tax of 3.07 percent and 24 percent for federal income tax on lottery prizes of more than $5,000. Anyone who wins over $600 will receive a W 2-G form from the state for calculating how much state income tax is due.

Will my heirs or estate have to pay inheritance and estate tax?

Pennsylvania has an inheritance tax, but the rate varies depending on the relationship between the decedent and the recipient of the estate or property. Property owned jointly between spouses is exempt from inheritance tax. If both spouses die in the same year, there is a 4.5 percent tax to transfer property to direct descendants and lineal heirs.

The rates are as follows:

• 0 percent on transfers to a surviving spouse or to a parent from a child aged 21 or younger
• 4.5 percent on transfers to direct descendants, such as children and grandchildren
• 12 percent on transfers to siblings
• 15 percent on transfers to other heirs, except charitable organizations, exempt institutions and government entities exempt from tax