Pennsylvania is one of the few states that has flat tax rates. 3.07% for individuals, but close to 10% for businesses. They also have an inheritance tax and have some of the highest property tax rates in the country. They don’t tax social security and have a low payroll tax wage base.
State Taxes at a Glance – Pennsylvania
|Type of Tax||2022|
|Individual Rates||3.07% flat tax|
|Corporate / Business Tax Rates||9.99% flat tax|
|Gross Receipts Tax||None|
|Sales Tax||6.34% (average)|
|Property Taxes||1.49% as a percentage of primary home|
|Estate or Inheritance Tax||Yes – Inheritance Tax|
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 3.60% 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 1.49%, 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 – Exempt
- Children under 21 – Exempt
- Children over 21 – 4.5%
- Grandchildren, Great Grandchildren, and so on – 4.5%
- Brothers and Sisters – 12%
- All other heirs – 15%
- Charitable Organizations and Government Entities are exempt
- Real Estate – property owned jointly between spouses is exempt from inheritance tax.
You may learn more at the Pennsylvania Department of Revenue website here.
Pennsylvania DMV fees
Pennsylvania has flat fees for vehicle registration. Since they are not based on the vehicles value, they are not deductible. To learn more, here’s a link to the Pennsylvania’s DMV website.
If you maintain a permanent place of abode for over 183 days, in aggregate, you are considered a Pennsylvania resident.
Pennsylvania Tax on Social Security Benefits
Even though there is a state income tax in Pennsylvania, they do not assess state income tax on social security benefits.
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
- UI Rates – range from 1.29% to 9.93%, which is quite high.
- Employee UI Withholding – all employees must withhold 0.06% on total wages
- 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
Pennsylvania Tax Contact Phone Numbers
Important phone numbers for the Pennsylvania Department of Taxation:
- Website: www.revenue.pa.gov
- Phone# for Individuals – (717) 787-8201
- Phone# for Businesses – (717) 787-1064