Pennsylvania has a state income tax of 3.07 percent on wages and other income

Yes, Pennsylvania charges a state income tax. The rate is flat at 3.07 percent, meaning everyone pays the same percentage regardless of how much they earn. This is different from the federal income tax, which uses brackets — you pay a higher percentage as your income rises.

The 3.07 percent applies to wages, salaries, net profits from self-employment, interest, dividends, and rental income. Pennsylvania does not tax Social Security benefits, pension income from out-of-state sources, or certain retirement account withdrawals, but those rules have specific conditions attached.

You file Pennsylvania income tax on Form PA-40, which is separate from your federal return. If you work in Pennsylvania but live in another state, or live in Pennsylvania but work elsewhere, different rules apply — and you may owe tax to both states.

Key Takeaways

  • Pennsylvania's state income tax rate is 3.07 percent on all wage income, self-employment income, and investment income.
  • Social Security benefits are not taxed in Pennsylvania, but pension income and retirement account distributions may be, depending on the source and your age.
  • You file Pennsylvania taxes using Form PA-40, which you submit to the Pennsylvania Department of Revenue, not with your federal return.
  • If you work in Pennsylvania but live in another state, you may owe Pennsylvania tax on wages earned here and also owe tax to your home state.

What income is subject to Pennsylvania tax

Pennsylvania taxes earned income — wages, salaries, tips, and net self-employment income. If you are a W-2 employee, your employer withholds Pennsylvania tax from your paycheck automatically. If you are self-employed, you pay estimated tax quarterly or settle the full amount when you file.

Pennsylvania also taxes unearned income: interest from savings accounts and bonds, dividends from stocks, capital gains from selling investments, and rental income. The 3.07 percent rate applies to all of these the same way it applies to wages.

Certain income is exempt. Social Security benefits received by Pennsylvania residents are not taxed. Pension income is taxed only if it comes from a Pennsylvania source — a pension from a Pennsylvania employer or government agency. Pensions from out-of-state employers are not taxed. Individual Retirement Account (IRA) distributions and 401(k) withdrawals are taxed as income in the year you withdraw them, unless they are rolled over into another retirement account.

How Pennsylvania withholds tax from your paycheck

When you start a job in Pennsylvania, you complete a PA-W4 form (Pennsylvania Employee Withholding Certificate). This tells your employer how much state tax to hold from each paycheck. Your employer sends that withheld amount to the Pennsylvania Department of Revenue on your behalf.

The amount withheld depends on your filing status, the number of dependents you claim, and whether you have other income. If you claim too many exemptions, too little tax is withheld and you may owe money when you file. If you claim too few, too much is withheld and you receive a refund.

You can change your withholding at any time by submitting a new PA-W4 to your employer. This is useful if your life changes — you get married, have a child, take a second job, or your spouse starts working.

Filing your Pennsylvania tax return

Pennsylvania residents file using Form PA-40, the state income tax return. You file this separately from your federal Form 1040 — they do not combine. The deadline is the same as federal: April 15 of the year following the tax year, unless you request an extension.

You can file on paper by mailing the form to the Pennsylvania Department of Revenue, or you can file electronically through the state's online system or through tax software. Many tax software programs (TurboTax, H&R Block, TaxAct) include Pennsylvania forms and will file electronically for you.

When you file, you report all income earned during the year — wages from your W-2, self-employment income, interest, dividends, and rental income. You subtract any deductions you are allowed (such as business expenses if you are self-employed) and calculate the tax owed. If your employer already withheld enough, you receive a refund. If not enough was withheld, you owe the difference.

Special situations: working across state lines

If you live in Pennsylvania and work in another state, you generally owe tax to that state on the wages you earned there, not to Pennsylvania. However, you may still owe Pennsylvania tax on other income — interest, dividends, rental income — if you are a Pennsylvania resident.

If you live in another state and work in Pennsylvania, you owe Pennsylvania tax on the wages you earned here. You also owe tax to your home state on the same wages. To avoid paying tax twice on the same income, most states offer a credit for taxes paid to other states, but you must file in both places to claim it.

If you moved to or from Pennsylvania during the year, you file as a part-year resident. You report only the income earned while you lived in Pennsylvania and pay tax only on that portion. You will also file in your other state for the months you lived there.

Tax credits and deductions available in Pennsylvania

Pennsylvania offers a standard deduction based on your filing status and age. For 2024, the standard deduction is $15,000 for single filers and $30,000 for married couples filing jointly. If you are 65 or older, the deduction is higher. You subtract this amount from your income before calculating tax.

Pennsylvania also offers a Earned Income Tax Credit (EITC) for low-income workers. This is a refundable credit, meaning if the credit is larger than the tax you owe, you receive the difference as a refund. The amount depends on your income and number of dependents. You claim this on your PA-40 form.

Other credits may be available depending on your situation — for example, credits for property tax paid, rent paid, or dependent care expenses. Check the Pennsylvania Department of Revenue website or your tax software to see which credits apply to you.

Frequently Asked Questions

Do I have to file a Pennsylvania return if I did not work in Pennsylvania?

If you are a Pennsylvania resident, you file a Pennsylvania return on all income you earned anywhere — wages, self-employment, interest, dividends, rental income. If you are not a Pennsylvania resident and did not earn income in Pennsylvania, you do not file a Pennsylvania return.

What happens if I do not pay my Pennsylvania income tax?

The Pennsylvania Department of Revenue can place a lien on your property, garnish your wages, or intercept your state and federal tax refunds. They can also charge penalties and interest on the unpaid amount. If you cannot pay in full, contact the Department of Revenue to discuss a payment plan.

Is Pennsylvania income tax withheld from my Social Security check?

No. Pennsylvania does not tax Social Security benefits, so no state income tax is withheld from those payments. However, if you have other income — wages, pensions, interest — you still owe Pennsylvania tax on that income.

Can I deduct federal income tax from my Pennsylvania return?

No. Pennsylvania does not allow you to deduct federal income tax paid. You use the standard deduction or itemize deductions allowed under Pennsylvania law, which is a separate list from federal deductions.

What if my employer did not withhold Pennsylvania tax?

You are still responsible for paying the tax owed. When you file your return, you will owe the full amount plus any penalties and interest. To avoid this in the future, verify that your employer is withholding by checking your pay stub or contacting your payroll department.