Rocky Mengle
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.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
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).
Related
-
I'm want to give my 3 grandkids $5K each for Christmas.You're comfortably retired and want to give your grandkids a big Christmas check, but their parents are worried they might spend it all. We ask the pros for help.
-
If You're Not Doing Roth Conversions, You Need to Read ThisRoth conversions and other Roth strategies can be complex, but don't dismiss these tax planning tools outright. They could really work for you and your heirs.
-
Could Traditional Retirement Expectations Be Killing Us?A retirement psychologist makes the case: A fulfilling retirement begins with a blueprint for living, rather than simply the accumulation of a large nest egg.
-
5 Types of Gifts the IRS Won’t Tax: Even If They’re BigGift Tax Several categories of gifts don’t count toward annual gift tax limits. Here's what you need to know.
-
The 'Scrooge' Strategy: How to Turn Your Old Junk Into a Tax DeductionTax Deductions We break down the IRS rules for non-cash charitable contributions. Plus, here's a handy checklist before you donate to charity this year.
-
IRS Says You Made a Tax Return Mistake? A New Law Could Help You Fight BackTax Law Updated taxpayer protections change what the IRS must explain on error notices and how long you have to respond.
-
Tax Refund Alert: House GOP Predicts 'Average' $1,000 Payouts in 2026Tax Refunds Here's how the IRS tax refund outlook for 2026 is changing and what steps you can take now to prepare.
-
Are You Middle-Class? Here's the Most Tax-Friendly State for Your FamilyTax Tips We found the state with no income tax, low property tax bills and exemptions on groceries and medicine.
-
Social Security Benefits Quiz : Do You Know the IRS Tax Rules?Quiz Social Security benefits often come with confusing IRS tax rules that can trip up financially savvy retirees and near-retirees.
-
How Are I Bonds Taxed? 8 Common Situations to KnowBonds Series I U.S. savings bonds are a popular investment, but the federal income tax consequences are anything but straightforward.
-
New 2026 Tax Change Could Mean More for Your IRA and 401(k) SavingsRetirement Savings Here's how the new IRS inflation adjustments will increase the contribution limits for your 401(k) and IRA in the new year.
