Ocity Logo ocity
Official Tax Guide

Pennsylvania Taxes 2025: Income, Sales, and Property Tax Guide

Complete guide to Pennsylvania state taxes. Income tax (3.07% (Flat)), sales tax, and what you need to know before moving.

Updated January 15, 2026
5 min read

State Tax Guide 2025: Pennsylvania

Moving to Pennsylvania offers a blend of urban excitement, suburban comfort, and rural beauty. Understanding the state’s tax landscape is essential for financial planning. This guide provides an overview of Pennsylvania’s tax structure for 2025, designed to help new residents navigate their obligations.

1. Income Tax

Pennsylvania stands out for its straightforward and low flat income tax rate.

  • Tax Rate: Pennsylvania imposes a flat income tax rate of 3.07% on all taxable income.
  • Structure: This is a flat tax, meaning the rate does not increase as your income rises. Whether you earn $30,000 or $300,000, the state income tax rate remains the same.
  • Local Taxes: While the state rate is uniform, residents in Philadelphia and Allegheny County (Pittsburgh) are subject to a local Earned Income Tax (EIT) in addition to the state rate. It is crucial to check with your specific municipality for local tax requirements.

2. Sales Tax

The statewide sales tax is relatively moderate compared to national averages.

  • State Rate: The Pennsylvania state sales tax rate is 6%.
  • Local Taxes: This is the base rate. Many municipalities, counties, and special districts have adopted additional "local" sales taxes. In some areas, the combined rate can reach 8% or higher.
  • Common Exemptions: Prepared food (restaurant meals), clothing, and certain digital goods are generally taxable. However, clothing items under $125 are exempt from the state portion of the tax (though local taxes may still apply). Groceries for at-home consumption are exempt from sales tax.

3. Property Tax

Property taxes in Pennsylvania are administered at the local level (county, school district, and municipality). There is no statewide property tax, but rates vary significantly.

  • Overview: Pennsylvania property taxes are a primary funding source for public schools. Because rates are set locally, they can differ dramatically from one county to another.
  • General Context: While specific rates fluctuate, Pennsylvania’s effective property tax rate often hovers around the national average. However, homeowners should anticipate significant variation; some rural areas have very low rates, while suburban school districts may have higher levies.
  • Relief Programs: Pennsylvania offers a "Homestead and Farmstead" property tax relief program, which reduces the assessed value of a primary residence for school tax purposes. Eligibility and amounts vary by school district.

4. Other Notable Taxes

Beyond income, sales, and property, Pennsylvania levies several other taxes that may impact your budget.

  • Gasoline Tax: Pennsylvania has one of the highest gas taxes in the nation. This tax is included in the price per gallon at the pump and funds road maintenance and infrastructure.
  • "Sin Taxes": The state applies specific excise taxes to alcohol (beer, wine, and spirits) and tobacco products. These rates are generally higher than general sales tax.
  • Inheritance Tax: Pennsylvania is one of the few states that still imposes an inheritance tax. This tax is paid by the person inheriting assets, not the estate. Rates vary based on the relationship to the decedent:
    • 0%: Spouses and children (descendants).
    • 4.5%: Siblings.
    • 12%: Other heirs (e.g., nieces, nephews, friends).
    • 15%: Direct line ancestors (parents, grandparents) and step-children.
  • Estate Tax: Pennsylvania does not have a separate estate tax (which is levied on the estate itself before distribution).

5. Retiree Taxes

Pennsylvania is considered one of the most tax-friendly states for retirees regarding retirement income.

  • Retirement Income: Pennsylvania does not tax retirement income. This includes distributions from 401(k)s, IRAs, pensions, and other qualified retirement plans.
  • Social Security: Social Security benefits are not taxed by Pennsylvania.
  • Age Limit: Taxpayers age 60 or older may be eligible for an exemption from local earned income taxes on wages, provided they are not self-employed.

6. Comparison to Neighbors

How does Pennsylvania stack up against its neighbors?

  • New York: New York has a progressive income tax (rates up to 10.9%) and generally higher sales taxes. Pennsylvania’s flat 3.07% rate is significantly lower for most middle-to-high-income earners.
  • New Jersey: NJ has a progressive income tax (up to 10.75%) but offers lower property taxes relative to home values compared to parts of PA. NJ does not tax retirement income, similar to PA.
  • Ohio: Ohio has a progressive income tax (though recently phasing out for many brackets) with a top rate of 3.5%. Sales tax is similar, but PA generally offers better tax treatment for retirees regarding pensions and IRAs.
  • Delaware: Delaware has no state sales tax, which is a major advantage for shoppers. However, it has a progressive income tax (top rate of 6.6%). Property taxes in Delaware are generally lower than in PA.

Disclaimer: Tax laws change frequently and can vary by locality. This guide is for informational purposes only and does not constitute legal or financial advice. Please consult a Certified Public Accountant (CPA) or tax professional for advice specific to your situation.