Pennsylvania Tax Guide: Low Flat Rate + Local Taxes

Tax Overview

Pennsylvania has one of the lowest state income tax rates in the nation at a flat 3.07%. However, the simplicity of this low rate is complicated by local earned income taxes that most municipalities impose, typically at rates between 1% and 3.1%. Philadelphia has the highest local rate at 3.44% for residents, meaning Philadelphians pay a combined income tax rate of about 6.5%. The state also has unique rules around what constitutes taxable income.

Sales tax in Pennsylvania is 6% at the state level, with Philadelphia adding 2% (for 8%) and Allegheny County (Pittsburgh) adding 1% (for 7%). Pennsylvania offers generous exemptions, with most groceries, clothing, footwear, and prescription drugs being exempt from sales tax. This makes Pennsylvania one of the more favorable states for consumer purchases.

Property taxes in Pennsylvania are above the national average, with effective rates around 1.49%. The system is entirely local, with rates varying dramatically between municipalities. Some school districts have property taxes exceeding 3% of assessed value. Pennsylvania offers a Property Tax/Rent Rebate Program for qualifying seniors, widows/widowers, and disabled individuals, providing rebates of up to $1,000.