Pennsylvania has a state income tax of 3.07 percent on wages, interest, and dividends
Yes, Pennsylvania charges a state income tax. The rate is 3.07 percent on most income — wages from a job, interest from savings accounts, and dividends from investments. This is a flat rate, meaning everyone pays the same percentage regardless of how much they earn. Pennsylvania does not use a progressive tax system where higher earners pay a higher rate.
The 3.07 percent rate applies to your federal taxable income after you subtract the standard deduction or itemize deductions on your federal return. Pennsylvania follows federal rules for what counts as income and what you can deduct, so if you already file a federal return, you have most of the information you need for Pennsylvania.
Pennsylvania also taxes net profits from self-employment and business income at the same 3.07 percent rate. If you are a sole proprietor, partner, or S-corporation owner, you report this income on your Pennsylvania return.
Key Takeaways
- Pennsylvania's state income tax rate is 3.07 percent on wages, self-employment income, interest, and dividends.
- You must file a Pennsylvania return if you earned more than the standard deduction amount or if the state withheld taxes from your paychecks.
- Pennsylvania uses the same income definition as the federal government, so your federal taxable income is your starting point.
- If your employer withheld Pennsylvania tax from your paychecks, you may receive a refund by filing a return, even if you would not otherwise have to file.
Who must file a Pennsylvania income tax return
You must file a Pennsylvania return if you had Pennsylvania source income and your income exceeds the standard deduction for your filing status. For the 2024 tax year, the standard deduction is $15,000 for single filers and $30,000 for married couples filing jointly. These amounts change each year, so check the Pennsylvania Department of Revenue website for the current year's threshold.
You must also file if Pennsylvania withheld state income tax from your paychecks, even if your income is below the standard deduction. Many people in this situation file to get a refund of the taxes that were taken out. Your W-2 form will show Pennsylvania tax withheld in box 18 (state income tax) and box 19 (state wages).
If you are self-employed and had net earnings of $400 or more, you must file both a federal return and a Pennsylvania return. Pennsylvania requires you to report self-employment income even if you fall below the standard deduction threshold.
What income Pennsylvania taxes and what it does not
Pennsylvania taxes earned income — wages, salaries, tips, and self-employment profits. It also taxes unearned income like interest from bank accounts, dividends from stocks, and capital gains from selling investments. Rental income and income from partnerships and S-corporations are taxable at the 3.07 percent rate.
Pennsylvania does not tax Social Security benefits, even if you have other income. Pension income and distributions from IRAs are also exempt from Pennsylvania state tax. This is a significant difference from federal tax, where Social Security may be taxable depending on your total income. If you are retired and living on Social Security and pension income, you likely will not owe Pennsylvania state tax.
Military pay for active-duty service members is exempt from Pennsylvania tax. Veterans' benefits and disability payments from the Department of Veterans Affairs are also not taxable by Pennsylvania.
How to file your Pennsylvania return
Pennsylvania uses Form PA-40, the Personal Income Tax Return. You can file on paper by mailing it to the Pennsylvania Department of Revenue, or you can file electronically through the state's online system or through tax preparation software that supports Pennsylvania returns.
If you use tax software like TurboTax, H&R Block, or TaxAct, Pennsylvania filing is usually included in the software package. The software will walk you through the questions and calculate your Pennsylvania tax based on your federal return information. Most software charges a separate fee for state returns, though some free versions include one state return.
The Pennsylvania Department of Revenue also offers free file options through its website if your income is below a certain threshold. You can check whether you may have access to for free filing on the state revenue department's homepage.
Pennsylvania tax withholding from your paycheck
Your employer withholds Pennsylvania income tax from your paycheck if you work in Pennsylvania or for a Pennsylvania employer. The amount withheld depends on the W-4 form you complete when you start your job. The withholding is sent to the state on your behalf throughout the year.
If too much tax is withheld, you will receive a refund when you file your return. If too little is withheld, you will owe the difference. You can adjust your withholding by submitting a new W-4 to your employer at any time during the year. This is useful if you have a major life change — a second job, marriage, or a child — that affects your tax situation.
If you work in Pennsylvania but live in another state, Pennsylvania still withholds tax on your wages. However, you may be able to claim a credit on your home state's return to avoid paying tax twice on the same income. The rules vary by state, so check with your home state's tax authority.
Deductions and credits available on your Pennsylvania return
Pennsylvania allows you to use the same standard deduction you claim on your federal return. You do not itemize deductions separately for Pennsylvania — the state follows the federal standard deduction amount. For 2024, that is $15,000 for single filers and $30,000 for married couples filing jointly.
Pennsylvania offers a Earned Income Tax Credit (EITC) for low-income workers. This is a refundable credit, meaning you can receive money back even if you owe no tax. The Pennsylvania EITC is calculated as a percentage of the federal EITC, so if you may have access to for the federal credit, you likely may have access to for the state credit as well. Tax software will calculate this automatically if you provide your income information.
Pennsylvania also offers credits for property tax paid and rent paid if you are a homeowner or renter with low income. These credits have income limits and are claimed on separate forms attached to your return. The Department of Revenue website lists all available credits and the income thresholds for each.
Common filing mistakes to avoid
The most common mistake is forgetting to file a Pennsylvania return when you had Pennsylvania source income, even if you do not owe tax. If your employer withheld Pennsylvania tax, you must file to get that refund. The state does not automatically refund withheld taxes — you have to claim them on a return.
Another mistake is using the wrong filing status. Your Pennsylvania filing status should match your federal filing status. If you filed as single on your federal return, you must file as single on your Pennsylvania return.
People who move out of Pennsylvania during the year sometimes forget to report that they were a part-year resident. If you moved to another state partway through the year, you may owe Pennsylvania tax only on income earned while you lived there. You will need to file a part-year resident return and provide documentation of when you moved.
Frequently Asked Questions
Do I have to file a Pennsylvania return if I only have Social Security income?
No. Pennsylvania does not tax Social Security benefits, so if Social Security is your only income source, you do not have to file a Pennsylvania return. If you have other income in addition to Social Security, you file based on that other income, not on the Social Security amount.
What if I worked in Pennsylvania but lived in another state?
You must file a Pennsylvania return for the income you earned while working in Pennsylvania. You may also have to file in your home state. To avoid paying tax twice, your home state may allow you to claim a credit for Pennsylvania taxes paid. Check your home state's rules or contact its tax authority.
Can I file my Pennsylvania return without filing a federal return?
You can file a Pennsylvania return independently, but Pennsylvania uses your federal taxable income as the starting point. If you have no federal filing requirement, you will still need to calculate what your federal taxable income would be to determine your Pennsylvania tax. Most people file both returns together.
What happens if I do not file a Pennsylvania return when I should have?
The Pennsylvania Department of Revenue can assess penalties and interest on unpaid taxes. If you owe a refund, you have a limited time to claim it — typically three years from the original due date. Filing late is better than not filing at all, especially if you are owed a refund.
Does Pennsylvania tax retirement income from my pension or IRA?
No. Pennsylvania does not tax pension income, IRA distributions, or 401(k) withdrawals. If your only income is from a pension or retirement account, you do not owe Pennsylvania state tax. You may still owe federal tax on these distributions.