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Pennsylvania State Taxes

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State Income Taxes in Pennsylvania

The state of Pennsylvania is one of few states with a flat individual income tax. Pennsylvania’s flat tax rate is 3.07%.

Local and City Income Taxes in Pennsylvania

Local & City Income Tax – Similar to Ohio Kentucky, Pennsylvania also has Local & City income tax rates in addition to the 3.07% state tax rate. Pennsylvania has the most local taxing jurisdictions in the country with approximately 2,978 different taxing jurisdictions. The Local & City tax rates vary from 1.00 to 3.4% depending on the jurisdiction (the average local & city income tax is 1.21%.)

State Business Taxes in Pennsylvania

The state of Pennsylvania has one of the highest business income tax rates in the country at 9.99%.

Sales and Property Taxes in Pennsylvania

State Taxes – like many states, Pennsylvania has multiple sales tax rates. One at the state level and another at the local level. The state rate is 6.00% and the average local rate is 0.34% (total average rate for Pennsylvania Sales Tax is 6.34%).

Property Taxes in Pennsylvania – the average property tax rate for residential property in the state of Pennsylvania is 1.51%, making it an awfully expensive place to own property. 

Inheritance tax in Pennsylvania

Pennsylvania is one of only 6 states in the country that has an inheritance tax. Pennsylvania inheritance tax affects lineal heirs, but not spouses. Your tax rate depends on your family lineage. Below is a list of the inheritance tax, broken down by heir:

  • Surviving Spouse – 0%
  • Children under 21 – 0%
  • Children over 21 – 4.5%
  • Grandchildren, Great Grandchildren, and so on – 4.5%
  • Brothers and Sisters – 12%
  • All other heirs – 15%
  • Real Estate – property owned jointly between spouses is exempt from inheritance tax.

You may learn more at the Pennsylvania Department of Revenue website here.

Payroll Taxes in Pennsylvania

Unemployment taxes usually consist of three factors. They are the wage base, range of rates, number of schedules. Below is an outline of the three:

  • Wage Base – Pennsylvania has a wage base of $10,000 for 2020
  • UI Rates – range from 0.15% to 11.03%, which is quite high.
  • Schedules – Pennsylvania has multiple schedules regarding UI.

Pennsylvania Business Entities – LLCs

Pennsylvania is an inexpensive state to to set up your LLC. Here are some important facts:

  • Pennsylvania’s LLC $70 fee is Decennial (paid once every 10 years).
  • When you register with the state, you pay a one time fee of $125
  • Secretary of State of Pennsylvania website –click here

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