Taxes in Pennsylvania are levied on a variety of items, including income, property, and retail sales items. Overall, Pennsylvania's state and local tax burden is 9.8 percent, according to numbers crunched by the nonprofit Tax Foundation. This ranks Pennsylvania at No. 36, in the bottom third of all states. Pennsylvania's state income tax is fairly low at a flat rate of 3.07 percent, and retirement income isn't taxed, which is a nice break for seniors. Property taxes can be high in some areas, however, and taxes levied on gasoline and cigarettes are among the highest in the nation.
The types of taxes and tax rates collected in Pennsylvania vary by location and situation, though, so be sure to check the specifics for your area.
Pennsylvania has a flat tax rate of 3.07 percent on individual income tax, with no standard deductions or personal exemptions.
The state of Pennsylvania does not levy or collect taxes on real estate or personal property. Instead, those taxes are reserved for the local governments including counties, municipalities, and school districts. Property taxes in Pennsylvania are collected only on real estate—land and buildings—and not on other types of property like cars or business inventory.
Sales and Use Tax
It's especially helpful for travelers to be aware of the Pennsylvania sales tax rates in advance of visiting the state. Pennsylvania imposes a 2 percent state sales tax on taxable goods and services (exemptions from sales tax include food, clothing, drugs, textbooks, resale items, and residential heating fuels). A local sales tax of 1 percent is also collected on the sales of taxable goods and services in Philadelphia and Allegheny counties (for a total of 7 percent sales tax).
It's important to note that local sales tax on motor vehicles is determined by the resident address of the purchaser, not by the location of the purchase.
Inheritance and Estate Tax
Pennsylvania collects an inheritance tax ranging from 4.5 percent for direct heirs to 15 percent for all other beneficiaries. Property inherited from a spouse or by a parent from a child 21 or younger is tax-exempt. Transfers to siblings have a 12 percent tax.
Other Pennsylvania Taxes
- Cigarette Tax is 31 cents per pack, which is included in the price of cigarettes.
- Liquor Tax is 18 percent. The Malt Beverage Tax has been the same since 1947.
- Gasoline (Fuel) Tax is 58.70 cents per gallon on gasoline and 34.70 cents on diesel fuel and is included in the price charged at the pump. This does not include the Federal tax.
- Realty Transfer Tax is collected by Pennsylvania counties at the rate of 1 percent on the monetary worth of the real estate. This applies to real estate transferred by deed or long-term lease.
- Hotel Use Tax is figured at 6 percent.
- The New Tire Tax is $1 per tire for tires to be used on the highway in Pennsylvania.
For more information on Pennsylvania taxes, visit the website of the Pennsylvania Department of Revenue. Residents and visitors may also contact the automated FACT and information line at 1-888-PATAXES.