Pennsylvania income tax rate for 2025 and 2026: a flat 3.07%

Pennsylvania’s personal income tax rate is 3.07% for residents and nonresidents, set in section 302 of the Tax Reform Code and unchanged since 2004. No law passed in 2025 or 2026 changed it, so it applies to both 2025 and 2026. There are no brackets.

What makes Pennsylvania different is how it reaches the income the rate applies to. It does not start from federal adjusted gross income. Instead it taxes eight classes of income: compensation; interest; dividends; net profits from a business, profession or farm; net gains from selling property; rents, royalties, patents and copyrights; income from estates or trusts; and gambling and lottery winnings. Income that fits none of the classes is not taxed.

You add up the positive income in each class; a loss in one class cannot reduce income in another, losses cannot be carried to other years, and spouses cannot offset each other’s losses. Pennsylvania allows no standard deduction, personal exemption or itemized deductions. The deductions it does allow are narrow: contributions to a medical savings account, health savings account, 529 college plan (up to $19,000 per beneficiary for 2025) or Pennsylvania ABLE account, and, new for 2025, up to $2,500 of student loan interest. Employees can also subtract unreimbursed job expenses.

For example, a single filer with $60,000 of wages and nothing else owes $1,842 to Pennsylvania for 2025, 3.07% of the full $60,000, before any local earned income tax. That is true even if part of the pay went into a 401(k): Pennsylvania taxes those contributions.

The July 2025 federal tax law (Public Law 119-21) created deductions for 2025 through 2028 for qualified tips (up to $25,000), overtime pay (up to $12,500, or $25,000 joint), car loan interest (up to $10,000) and an extra $6,000 for people 65 or older. None of them applies in Pennsylvania: the state does not start from federal income, allows no personal deductions, and counts tips as taxable compensation. Bills to exempt overtime from Pennsylvania tax were referred to the Finance committees in 2025 and have not become law.

Pennsylvania does not tax Social Security or Railroad Retirement benefits. It also does not tax commonly recognized retirement benefits from an eligible employer plan, such as a pension or 401(k), once you are eligible to retire and have retired, or IRA withdrawals at 59½ or later. Military pensions are not taxed either.

The flip side is that money going in is taxed: your contributions to a 401(k) or similar plan count as taxable compensation in Pennsylvania even when they are not federally, and IRA contributions are not deductible. Because you already paid tax on them, Pennsylvania does not tax distributions until you have recovered what you put in.

Pennsylvania’s tax forgiveness program, on Schedule SP, wipes out some or all of the state tax for low-income households. For 2025 a single person with eligibility income up to $6,500 gets 100% forgiveness, $13,000 for a married couple, plus $9,500 for each dependent child; the forgiveness drops by 10 points for each $250 above that, down to 10%. Eligibility income is broader than taxable income, though it leaves out Social Security, retirement payments and unemployment. It is not automatic: you must file.

Most Pennsylvania municipalities and school districts levy a local earned income tax (EIT) on wages and business profits, generally capped at 1% combined outside a few home-rule cities. Under Act 32, employers withhold the higher of your home municipality’s resident rate and the work location’s nonresident rate, and school districts cannot tax nonresidents. You file a final local return with your resident tax collector by April 15. Look up rates by municipality and school district with the state Department of Community and Economic Development’s PSD codes and EIT rates tool.

Many places also charge a local services tax of up to $52 a year, regardless of how many towns you work in, with an exemption for people earning under $12,000 where the tax is over $10.

You must file a PA-40 if your Pennsylvania gross taxable income is more than $33, about $1 of tax, or if you had a loss, even if no tax is due. Minors are not exempt. 2025 returns were due April 15, 2026. Pennsylvania grants up to six months more to file: if you have a federal extension and owe no Pennsylvania tax, it applies automatically; otherwise file Form REV-276 by April 15 with any payment. An extension does not extend the time to pay.

You can file the PA-40 for free through the Department of Revenue’s myPATH site, with no username needed.

Check a Pennsylvania refund online through myPATH, linked from the Department of Revenue’s refund page; you need your Social Security number and the refund amount. You can also call 1-888-PATAXES (1-888-728-2937). Direct deposit is only for e-filed returns.

The Department gives no standard number of weeks, but says e-filed refunds are processed in half the time of paper returns, and asks you not to call about a refund until twelve weeks after you file.

Pennsylvania has reciprocal agreements with Indiana, Maryland, New Jersey, Ohio, Virginia and West Virginia. A resident of one of those states pays tax on W-2 wages earned in Pennsylvania only at home, and files Form REV-419 with the employer to stop Pennsylvania withholding; if Pennsylvania tax was withheld anyway, file a PA-40 reporting zero compensation to get it back. A Pennsylvania resident working in one of those states gets any wrongly withheld tax back from that state. The agreements cover only employee wages, not self-employment or other income, and not local wage taxes.

Pennsylvania residents are taxed on all income and claim the Schedule G-L credit for tax paid to any other state. Nonresidents pay Pennsylvania tax only on Pennsylvania-source income, not on their interest or dividends. You are a Pennsylvania resident if it is your domicile, or if you keep a permanent home here and spend more than 183 days of the year in the state.