The State of Pennsylvania requires you to pay taxes whether you are a resident or a non-resident who receives income from a Pennsylvania source. The state has a flat tax rate of 3.07% and a sales tax rate of 6%.

Pennsylvania offers a few deductions and tax credits to reduce your tax liability, including deductions for contributions to medical and health savings accounts and contributions to 529 college savings plans, as well as a tax credit. tax for taxes paid to another state.

Pennsylvania Income Tax Rates

Pennsylvania has a flat tax rate of 3.07%.

Pennsylvania Income Tax Deductions

Standard deduction

Pennsylvania does not offer a standard deduction.

Detailed deductions

However, the state offers the possibility of making some deductions from your taxable income by detailing, in particular:

Contributions to medical and health savings accounts

Pennsylvania follows federal rules for deducting contributions to Health Savings Accounts (HSAs) and Archer Medical Savings Accounts (MSAs). These tax-advantaged accounts work in tandem with high-deductible health plans (HDHPs).

For the 2021 tax year, you could contribute up to $3,600 to an HSA (up to $7,200 for family coverage). With an Archer MSA, you can contribute up to 75% (65% for self-insurance plans only) of the annual insurance deductible for your HDHP.

However, you can only qualify for full amortization if you were eligible for high-deductible medical coverage and remained on the same plan for the entire year. If you were only eligible for part of the year or switched plans during that time, you could only contribute part of the deductible amount to your Medicare plan in 2021.

Contributions to 529 education savings plans

If you contribute to a 529 plan — which can be used to save for higher education or to prepay tuition for a prospective student — Pennsylvania allows you a deduction of up to excluding federal tax on donations by beneficiary. For the 2021 tax year, the federal gift tax exclusion is $15,000.

Pennsylvania ABLE Savings Account Contributions

The Pennsylvania Achieving a Better Life Experience (PA ABLE) savings program provides people with disabilities, and their families and friends, a tax-free way to set aside money for disability-related expenses. Pennsylvania allows contributions to ABLE savings accounts up to the federal gift tax exclusion limit per contributor. The limit for 2021 tax returns is $15,000.

Pennsylvania State Income Tax Credits

Although Pennsylvania offers a number of tax credits for corporations and flow-through entities, the state only offers one tax credit for individuals who are not business owners. This is for taxes paid to another state.

Taxes paid to another state tax credit

If you are a resident of Pennsylvania and you also pay income tax in another state, you can claim a credit on your Pennsylvania income. The credit allowed can be equal to the amount of tax paid using state supply rules, but it cannot be greater than the amount of income subject to Pennsylvania income tax.

Additionally, the credit will not be given for income from Indiana, Maryland, New Jersey, Ohio, Virginia, or West Virginia, as these states do not tax residents of Pennsylvania.

Do I have to pay income taxes in Pennsylvania?

Year-round residents, part-year residents, and non-residents are all required to file a Pennsylvania tax return once they earn more than $1 of taxable income, even if no tax is due.

Sales tax and sales tax rate

The state sales tax rate is 6%. An additional local tax is added in some counties.

Property taxes and property tax rates

Property tax rate

Property taxes are levied at the municipal level in Pennsylvania.

Capital gains tax

Capital gains are taxed as ordinary income for residents of Pennsylvania. Non-residents are not taxed on capital gains.

Inheritance and inheritance tax and exemption from inheritance and inheritance tax

Pennsylvania charges an estate and estate tax in certain cases. However, depending on the relationship between the heir and the deceased, the state may levy the following taxes:

• Surviving spouses and a parent to a child under 21: 0%
• Direct descendants and heirs in direct line: 4.5%
• Brothers and sisters: 12%
• Other heirs (except charities, exempt institutions and government entities): 15%