Income Taxes in Pennsylvania
Pennsylvania's income tax is genuinely three layers in most cases, not one: a real, current flat 3.07% STATE rate applied from the first dollar -- plus, for nearly every resident outside Philadelphia, a separate LOCAL Earned Income Tax (EIT) under Act 511/Act 32 -- OR, for Philadelphia residents specifically, the city's own separate Wage Tax. This record treats the local layer as the centerpiece of Pennsylvania's tax story, given how genuinely more fragmented it is than even Ohio's own municipal income tax system.
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Learn morePennsylvania's state rate: one flat rate, from the first dollar
Pennsylvania's state personal income tax is a real, current flat 3.07%, applied to eight enumerated classes of taxable income (compensation; interest; dividends; net profits from a business, profession, or farm; net gains from property sales; net income from rents/royalties/patents/copyrights; gambling and lottery winnings; and estate/trust income) -- with NO zero bracket, standard deduction, or personal exemption, a real difference from Ohio's own $26,050 zero-bracket structure. Genuinely offsetting this for retirees: Pennsylvania fully exempts Social Security income, and pension/401(k)/IRA distributions taken at or after normal retirement age, from state tax entirely.
The local Earned Income Tax layer: Pennsylvania's genuinely distinctive, fragmented complexity
Virtually every one of Pennsylvania's roughly 2,560 municipalities AND its more than 500 school districts can each separately levy their own Earned Income Tax (EIT) under Act 511 (1965), combined into ONE municipal-plus-school-district rate -- commonly 1.0%-2.0% combined, up to 3.9% in a handful of higher-rate places. Act 32 (2008) consolidated COLLECTION (not the underlying taxing authorities) into 69 county-level Tax Collection Districts, each using a single designated collector -- commonly Berkheimer (southeastern/central Pennsylvania) or Keystone Collections Group (western/northeastern Pennsylvania). Employers withhold based on the HIGHER of an employee's resident or work-municipality rate, under Act 32's uniform-withholding rule.
Philadelphia is the one major, real, structural exception: the Wage Tax, not EIT
Philadelphia does not participate in the Act 32 EIT system at all. Instead, the city levies its own, separate Wage Tax directly on salaries and wages, administered by the Philadelphia Department of Revenue -- a real, current two-tier rate this record verified at build time: 3.735% for residents and 3.425% for non-residents who work in the city, effective for pay dates after 2026-06-30 (part of a real, five-year phased-reduction plan Philadelphia City Council approved in June 2025, ultimately targeting roughly 3.70%/3.39%). A commuter who lives outside Philadelphia but works in the city owes Philadelphia's non-resident Wage Tax on Philadelphia-source wages, AND separately owes EIT (if any) to their own home municipality and school district.
Confirm your specific target municipality and school district directly
Because Pennsylvania's local EIT is set by the SPECIFIC combination of municipality and school district, and because Philadelphia's mechanism is entirely different from the rest of the state, this record does not cite a single statewide 'Pennsylvania local tax rate.' Confirm your specific target municipality's and school district's current combined EIT rate and collector (via Berkheimer's or Keystone's own published rate lookup) -- or, for Philadelphia, the city's current Wage Tax rate directly with the Philadelphia Department of Revenue.
Key takeaways
- Pennsylvania's state income tax is a real, current flat 3.07%, applied from the first dollar with no zero bracket -- but Pennsylvania fully exempts Social Security and (at normal retirement age) pension/401(k)/IRA income entirely.
- Most Pennsylvania municipalities AND school districts ALSO levy their own combined local Earned Income Tax (commonly 1.0%-2.0%, up to 3.9%), collected through one of 69 Tax Collection Districts (commonly Berkheimer or Keystone Collections Group).
- Philadelphia is the one major exception: instead of EIT, it levies its own separate Wage Tax (3.735% resident / 3.425% non-resident as of this pass) on a real, disclosed multi-year reduction schedule.
- Confirm your specific target municipality's AND school district's combined EIT rate and collector directly -- or, in Philadelphia, the city's current Wage Tax rate -- rather than assuming one statewide local-tax figure.
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