Pennsylvania Income Tax Calculator 2026

How Pennsylvania’s flat income tax works

Pennsylvania taxes income at 3.07%, with no standard deduction and no personal exemption. Instead of starting from federal AGI, Pennsylvania sorts income into eight classes: compensation; interest; dividends; net business profits; net gains from property dispositions; rents, royalties, patents and copyrights; income from estates or trusts; and gambling and lottery winnings. Each class is figured under Pennsylvania rules, then the total is taxed at the flat rate.

Only three deductions are allowed against income: contributions to medical savings accounts, health savings accounts and Section 529 tuition accounts. Employees can also reduce compensation by unreimbursed expenses that are ordinary, necessary and directly related to their job.

Worked example: $65,000 wages plus $2,000 interest

A Pennsylvania resident with $65,000 of compensation and $2,000 of bank interest:

• Taxable income: $65,000 + $2,000 = $67,000.
• Pennsylvania tax: $67,000 × 3.07% = $2,057.
• If this person contributed $6,000 to a 401(k), the tax would be the same, because 401(k) deferrals are taxable compensation in Pennsylvania. A $4,000 HSA contribution, by contrast, would cut the tax by $123.
• A 1% local Earned Income Tax on the wages would add about $650.

Retirement income and other exclusions

Pennsylvania generally does not tax retirement income: Social Security, pensions and 401(k) or IRA distributions received after retirement age are excluded. That makes Pennsylvania attractive to retirees despite the tax on wages from the first dollar.

• Gain on the sale of your principal residence is excluded if you meet the ownership and use requirements.
• Personal use of employer-owned property is excluded from compensation.
• Section 125 cafeteria plan payments for health, sickness, disability or death coverage are excluded.

Tax Forgiveness for lower-income households

Pennsylvania’s Tax Forgiveness program can reduce or eliminate the tax for households with low eligibility income, depending on family size. For example, a married couple with two dependent children can earn up to $34,250 and qualify, and a single parent with two children can earn up to $27,750. Nearly one in five households qualifies for at least partial forgiveness. You claim it by filing a PA-40 with Schedule SP.

Residency, credits and filing

Pennsylvania taxes residents — people domiciled in the state or statutory residents — on income from everywhere, and lets them claim a credit for income taxes paid to other states. Nonresidents are taxed only on Pennsylvania-source income and cannot claim that credit. Your domicile is the one place you maintain a permanent home and intend to return to; if you have more than one home, the place of greatest connections and your intent decide it.

Returns are filed on Form PA-40 by April 15, and you can file free through the Department of Revenue’s myPATH system. Local Earned Income Tax returns are filed separately with your local tax collector.