Pennsylvania Tax

Pennsylvania State Tax

Pennsylvania Income Tax

The state of Pennsylvania imposes state income tax on the income of all individuals, companies, and estates located in the state. Non-residents who work in Pennsylvania are also subject to income tax except those from Indiana, Maryland, New Jersey, Ohio, Virginia, and West Virginia. Apart from wages, earnings from investments, interests, rent, dividends, business profits, royalties, copyright, and winnings must be included in the income tax return filed to the Pennsylvania Department of Revenue. Taxpayers can file their income tax returns manually or electronically.

Pennsylvania collects the lowest maximum marginal income tax rates in the United States. Qualified taxpayers pay 3% of their annual taxable income. Pennsylvania is one of the few states that levy additional income taxes at county and city levels.

Businesses and companies are also required to file income tax returns. The corporate income tax rate in Pennsylvania is flat 9.99%. Corporations pay the same income tax rate regardless of the amount of income earned in a year.

Pennsylvania Sales Tax

Most states levy tax on sales of most products and services. The state sales tax rate in Pennsylvania is 6%. Counties, municipalities and other special jurisdictions are allowed to levy additional local sales tax to up to 2% on top of the 6% state sales tax. The state exempts a few goods and services including grocery items (except soda and other unhealthy food), clothing items, prescription and non-prescription drugs, newspapers, farm supplies, and internet services. Out-of-state purchases are subject to use tax instead of sales tax.