Taxes in Pennsylvania

Taxes in Pennsylvania are lower than in New Jersey. The state will also send property tax/rent rebates to eligible residents for the 2022 tax year. Below, we explain various Pennsylvania state taxes affecting retirement income, such as sales tax, inheritance tax, and property taxes.

For information regarding taxes in other states, see Retirement Taxes by State.

Pennsylvania Tax Rates

State Sales Tax	6%
Avg State/Local Sales Tax	6.34%
Gas Tax	$0.58 per gallon
Diesel Tax	$0.74 per gallon
Cigarette Tax	$2.60 per pack
Income Tax	3.07%
Effective Tax Rate:	3.07%
Property Tax	1.58%
Social Security Tax	None
Medical/Dental Deduction:	None
Federal Income Tax Deduction:	None
Retirement Tax	None

Pennsylvania State Taxes Explained

Pennsylvania Sales Tax

6%. Groceries, clothing, textbooks, heating fuels, and prescription and over-the-counter drugs are exempt. Other taxing entities may add up to 2%.

Pennsylvania Income Taxes

3.07% flat rate. Municipalities and school districts can also impose taxes on wages.

Pennsylvania Property Taxes

Pennsylvania’s average effective property tax rate is 1.58%. Homeowners pay an average property tax of $2,852 on a $180,200 home.

Homeowners and renters age 65 or older and widows or widowers who are at least 50 years old are eligible for the Property Tax/Rent Rebate Program. This program also extends to adults with disabilities. The maximum standard rebate is $650. Qualifying annual household income must not exceed $35,000 for homeowners or $15,000 for renters. The program excludes 50% of each Social Security payment from eligibility income.

Residents may use the Pennsylvania Property Tax and Rent Rebate Program with supplemental rebates to receive up to $975 for homeowners with particularly high tax burdens.

Some counties may levy an intangible personal property tax on stocks, bonds and other personal property. Not all counties levy this tax.

Pennsylvania Retirement Taxes

All retirement income is tax exempt for Pennsylvania residents aged 60 and older. This income includes public and private pensions, Social Security income, United Mine Workers’ pensions, military pensions and civil service annuities. Military Disability Retirement Pay received as a pension, annuity or similar allowance for personal injury or sickness resulting from active service is generally not taxable in Pennsylvania.

For more information, see Pennsylvania’s Personal Income Tax Guide.

Pennsylvania Estate and Inheritance Taxes

The Pennsylvania inheritance tax is calculated at a percentage of the value of the assets transferred, the relationship of the heir to the decedent, and the decedent’s date of death. There is no tax on transfers to a surviving spouse or to a parent from a child aged 21 or younger.

The tax rate is 4.5% for transfers to direct descendants (lineal heirs) and 12% for transfers to siblings. Transfers to other heirs (except charitable organizations, exempt institutions and government entities) incur a 15% tax. The state allows a 5% discount if Pennsylvania inheritance taxes are paid within three months of the decedent’s death.

For further information, visit the Pennsylvania Department of Revenue.