New York vs Pennsylvania: Taxes & Take-Home Pay 2026

What this comparison is really about

New York and Pennsylvania meet along a long border, and people compare them for three common reasons: moving from New York City to Philadelphia or the Lehigh Valley, retiring from New York to a lower-cost Pennsylvania town, or living in Pennsylvania while working for a New York employer. The state income tax gap is large, but Pennsylvania’s local wage taxes close part of it.

In one sentence: Pennsylvania charges a flat 3.07% with no deductions, New York charges 3.9% to 10.9% after a standard deduction, and the city you live in can add more than 3% in either state.

How each state calculates the tax

Pennsylvania taxes compensation from the first dollar. There is no standard deduction or personal exemption, and employee 401(k) contributions are not deductible for Pennsylvania purposes, even though they reduce your federal wages. Low-income households can qualify for Tax Forgiveness instead.

New York starts from federal adjusted gross income, subtracts a $8,000 standard deduction ($16,050 for joint filers) and a $1,000 exemption per dependent, then applies graduated rates. At typical salaries New York’s marginal rate is 5.9%, almost double Pennsylvania’s.

Local wage taxes: NYC vs Philadelphia vs the rest

The local layer is where the comparison gets interesting. New York City residents pay 3.078% to 3.876%; elsewhere in New York State, only Yonkers has a resident income tax. In Pennsylvania almost every municipality and school district levies an Earned Income Tax, commonly about 1%, plus a Local Services Tax of up to $52 a year. Philadelphia’s resident wage tax is 3.735% and Pittsburgh’s combined resident rate is 3%.

For a single filer earning $90,000 in wages, the state plus local income tax works out to approximately:

Living in Pennsylvania, working for a New York employer

There is no reciprocal agreement between New York and Pennsylvania. If you live in Pennsylvania and work in New York, New York taxes those wages on a nonresident return (Form IT-203), and Pennsylvania allows a credit against your Pennsylvania tax for income taxes paid to other states. Because New York’s rates are higher, the credit usually wipes out the Pennsylvania state tax on those wages.

Remote work does not escape this. New York counts a nonresident’s telecommuting days as New York days when the primary office is in New York, unless the employer has set up a bona fide office at your home. A Bucks County resident who works from home four days a week for a Manhattan firm should still expect New York withholding.

Retirement income, payroll programs and sales tax

Pennsylvania generally does not tax retirement income such as pensions, 401(k) and IRA distributions after retirement age, or Social Security. New York also leaves Social Security untaxed and fully exempts New York State, local and federal government pensions, but private pensions and IRA withdrawals are taxable above a $20,000 exclusion per person aged 59½ or older. A New York retiree with a large private pension or IRA has a clear incentive to compare.

On payroll, Pennsylvania employees pay 0.07% of all wages to unemployment compensation with no cap, while New York employees pay 0.432% for Paid Family Leave up to the annual cap plus up to $0.60 a week for disability insurance. Sales tax is 6% in Pennsylvania (7% in Allegheny County, 8% in Philadelphia) and 4% plus local tax in New York, averaging 8.54%.

The year you move

Pennsylvania taxes part-year residents on all income earned, received or realized while they were residents, plus Pennsylvania-source income for the rest of the year. New York does the same with Form IT-203. Split your W-2 wages by the date you moved, and remember that a final New York paycheck or bonus paid after you move can still be New York-source income if it was earned for work done there.