Allentown PA tax rates come in several layers. Homeowners pay property tax under a split-rate system, with the city charging roughly 24.47 mills on land and 4.63 mills on buildings, plus 3.78 mills from Lehigh County and about 22.64 mills from the Allentown School District. Residents also owe a 1.975% local earned income tax and Pennsylvania’s flat 3.07% state income tax. Anyone employed within city limits pays a $52 Local Services Tax each year, and property sales carry a transfer tax that starts at 1% for the state alone.
Property Tax and the Split-Rate System
Allentown is one of a handful of Pennsylvania cities that taxes land and buildings at different rates. A mill equals one dollar of tax per $1,000 of assessed value. According to the Lehigh County Assessment Office’s 2026 millage sheet, the city rate on land is approximately 24.47 mills, while the rate on buildings is approximately 4.63 mills.1Lehigh County. Office of Assessment Lehigh County Millage 2026 The design encourages construction: adding a building to a lot doesn’t raise your tax bill as sharply as it would under a flat rate.
Two other levies appear on the same bill. Lehigh County’s rate for 2025–2026 is 3.78 mills.2Lehigh County. Office of Assessment Lehigh County Millage 2025 The Allentown School District carries the largest share of the total at roughly 22.64 mills. All three are applied to the assessed value set by the Lehigh County Assessment Office, not the market price, so a neighbor’s sale figure isn’t a fair yardstick for your bill.
Property Tax Deadlines and the Discount Window
Allentown’s city property tax runs on a three-tier calendar:
- Pay the city portion in full by April 5 and you receive a 2% discount.
- Miss the discount window and the face amount is due by July 15.
- From July 16 onward, a 10% penalty is added, and the penalized amount must be paid by December 31.
The 2% discount applies only to the city’s share, not the county or school district portions.3City of Allentown. City Real Estate Tax Unpaid balances after December 31 go into delinquent status and can lead to a lien.
Tax Relief and Assessment Appeals
Property Tax/Rent Rebate Program
Pennsylvania runs a rebate program for older adults and people with disabilities. You may qualify if you are 65 or older, a widow or widower 50 or older, or a person with a disability 18 or older, with household income of $48,110 or less. Rebates by income tier:
- $0 to $8,550: $1,000
- $8,551 to $16,040: $770
- $16,041 to $19,240: $460
- $19,241 to $48,110: $380
Applications for the 2025 tax year are due June 30, 2026.4Commonwealth of Pennsylvania. Property Tax/Rent Rebate Program Renters who pay property taxes indirectly through rent can also apply.
Homestead Exclusion
The Allentown School District participates in Pennsylvania’s homestead and farmstead exclusion, funded by gaming revenue. The exclusion reduces the assessed value of your primary residence before the school district millage is applied, and the amount is set annually based on the district’s state allocation.5Commonwealth of Pennsylvania. Property Tax Reduction Allocations You have to apply through the county; it is not automatic.
Appealing Your Assessment
If your assessment looks too high, appeal to the Lehigh County Board of Assessment Appeals. After the board issues its decision, you have 30 days from the mailing date on the notice to file a petition with the Lehigh County Court of Common Pleas. The filing fee is $170.25, and you must serve copies on the Board of Assessment Appeals, the school district, and the municipality. Corporations must be represented by counsel; individual homeowners can file on their own.6Lehigh County Court of Common Pleas. Tax Assessment Appeals – Self Help
Earned Income Tax
Allentown levies an earned income tax on wages, salaries, commissions, and net profits. The combined resident rate is 1.975%, which includes both the municipal and school district shares.7City of Allentown. Allentown Code Article VI – Earned Income Tax It’s applied to gross compensation, not federal adjusted gross income.
If you work in Allentown but live elsewhere, the nonresident rate is 1.28%.7City of Allentown. Allentown Code Article VI – Earned Income Tax Pennsylvania employers must withhold the earned income tax and the Local Services Tax from paychecks.8Pennsylvania Department of Community and Economic Development. Local Income Tax Requirements for Employers You still have to file an annual return by April 15 to reconcile withholding against what you actually owe.9Pennsylvania General Assembly. Local Tax Enabling Act Collection is handled by Berkheimer, a third-party agency, rather than the city.10Berkheimer. Home Part-year residents prorate their liability by month using Berkheimer’s part-year worksheet.11Berkheimer. Part Year Resident Earned Income Tax Worksheet
Pennsylvania State Income Tax
Pennsylvania adds a flat 3.07% state income tax on wages, interest, dividends, business income, and several other categories.12Commonwealth of Pennsylvania. Tax Rates Unlike the local EIT, which applies only to earned income and net profits, the state tax reaches investment income. There is no standard deduction or personal exemption at the state level, though certain retirement income is fully exempt. Stacked with the local 1.975%, an Allentown resident earning only wages faces roughly 5.045% in combined state and local income tax.
Local Services Tax
Anyone employed within Allentown owes a flat $52 Local Services Tax each year, whether they live in the city or not. The city gets $47 and the school district gets $5. Because the combined rate is over $10, employers deduct it in installments across the year rather than in a lump sum.13Pennsylvania Department of Community and Economic Development. Local Services Tax
Two exemptions apply. If your total earned income and net profits from all sources within the city are under $12,000 for the calendar year, you can file a certification with your employer to be exempt. Certain military service members and honorably discharged veterans with qualifying service-connected disabilities are also exempt.13Pennsylvania Department of Community and Economic Development. Local Services Tax If you work in more than one municipality, the total LST paid across all of them is capped at $52.
Business Privilege and Mercantile Tax
Businesses operating in Allentown owe a gross receipts tax at rates that depend on the type of business:
- Service and rental businesses: 3 mills, or $3 per $1,000 of gross revenue (Business Privilege Tax)
- Retail businesses: 1.5 mills, or $1.50 per $1,000 (Mercantile Tax)
- Wholesale businesses: 1 mill, or $1 per $1,000
These rates are set in the city code.14City of Allentown. Allentown Code 570 – Taxation – Section 570-3 Tax Rate and Basis Because the base is gross receipts, cost of goods sold and overhead are generally not deductible unless the Local Tax Enabling Act or the city code specifically allows it.15City of Allentown. Business Privilege Tax Regulations A service business grossing $500,000 owes $1,500 in Business Privilege Tax even if it barely broke even after expenses.
Real Estate Transfer Tax
When Allentown property changes hands, transfer tax applies to the sale price or fair market value, whichever is higher. Pennsylvania charges 1% at the state level on every transfer of real property.16Commonwealth of Pennsylvania. Realty Transfer Tax The city and the Allentown School District share an additional local transfer tax under the Local Tax Enabling Act, which caps the combined local rate.17City of Allentown. Allentown Code Article II – Realty Transfer Tax Both buyer and seller are liable under the statute, though the split is typically negotiated in the sale agreement.
The Lehigh County Recorder of Deeds collects the tax at recording. The state portion goes to the Pennsylvania Department of Revenue, and the local share stays with the city and school district.16Commonwealth of Pennsylvania. Realty Transfer Tax Certain transfers are exempt, including transfers between spouses, transfers to or from governmental entities, and transfers to certain family trusts. On a $250,000 sale, the state 1% alone is $2,500 before the local share is added.