Pennsylvania’s personal income tax is a flat 3.07 percent on nearly every dollar of taxable income. There is no standard deduction, no personal exemption, and no graduated brackets. If you live in Pennsylvania, moved in or out during the year, or earned money from a Pennsylvania source while living elsewhere, the same rate applies and the filing rules are the same.1Pennsylvania Department of Revenue. Personal Income Tax
Who Has to File a PA-40
You must file a PA-40 return if your Pennsylvania-taxable income produces even $1 of tax liability for the year. Because the state offers no baseline deduction to absorb low earnings, the filing obligation starts almost immediately.2Department of Revenue. Brief Overview and Filing Requirements
Three groups fall under the requirement. Full-year residents owe 3.07 percent on all taxable income, including income earned in another state. Part-year residents owe tax on income received while they were Pennsylvania residents, plus any Pennsylvania-source income received before or after. Nonresidents owe tax on wages, rental income, or business profits sourced inside Pennsylvania.3Pennsylvania General Assembly. Pennsylvania Code 72 PS 7302 – Imposition of Tax
Pennsylvania sorts taxable income into eight separate classes — compensation, net business profits, gains from property sales, rents and royalties, dividends, interest, gambling and lottery winnings, and income from estates and trusts — and you calculate each one independently. Losses in one class generally cannot offset income in another; a stock loss, for example, does not reduce your wages.4Pennsylvania General Assembly. Pennsylvania Code 72 PS 7303 – Classes of Income
Income Pennsylvania Does Not Tax
Several income types the IRS treats as taxable are fully exempt in Pennsylvania. Missing these means overpaying.
Retirement income. Social Security benefits are not taxed. Distributions from employer-sponsored retirement plans are also exempt if you separated from service after meeting the plan’s retirement eligibility requirements based on age, years of service, or a combination.5Pennsylvania Department of Revenue. Do I Have to Pay PA Income Tax on My Retirement Pension After I Retire From the Company IRA distributions become tax-free once you reach age 59½.6Pennsylvania Department of Revenue. Gross Compensation
Unemployment and workers’ compensation. Both are excluded from Pennsylvania taxable compensation, even though federal rules tax unemployment benefits.6Pennsylvania Department of Revenue. Gross Compensation
Military pay earned outside Pennsylvania. If you are a Pennsylvania resident on active duty stationed outside the state, that pay is not taxable here. Pay earned while stationed inside Pennsylvania remains taxable. Military retirement pensions are fully exempt regardless of where you live.7Pennsylvania Department of Revenue. Should I Report My Active Military Pay on My PA Personal Income Tax Return
Deductions You Can Actually Take
Pennsylvania allows no standard deduction, no personal exemption, and no itemized deductions for mortgage interest, state and local taxes, or charitable giving.8Pennsylvania Department of Revenue. Deductions and Credits Only four deductions exist on the personal return:
- Contributions to a 529 qualified tuition program, up to $19,000 per beneficiary per year ($38,000 for married couples filing jointly if each spouse earned at least $19,000). The limit tracks the federal annual gift tax exclusion.9Pennsylvania 529 College and Career Savings Program. PA 529 FAQs
- Contributions to a PA ABLE savings account, up to $19,000 per year, for Pennsylvania residents saving on behalf of someone with a disability.10Pennsylvania Treasury. Treasurer Stacy Garrity Announces Expanded PA ABLE Eligibility Now in Effect
- Health Savings Account contributions, following the federal rules and dollar limits.
- Medical Savings Account contributions, following the federal Archer MSA rules.
HSA and MSA deductions are available only if you are also eligible to claim them on your federal return.8Pennsylvania Department of Revenue. Deductions and Credits
Employees have one more option that federal law eliminated after 2017: unreimbursed employee business expenses. If your employer requires you to pay for job-related costs out of pocket and does not reimburse you, you can subtract them from your compensation on PA Schedule UE. Eligible items include union dues, required uniforms not suitable for everyday wear, small tools your employer does not provide, professional license fees, malpractice insurance required for the job, and business travel costs like mileage, parking, tolls, and overnight lodging.11Pennsylvania Department of Revenue. PA Schedule UE Allowable Employee Business Expenses
Credits That Can Cut or Erase the Bill
Tax Forgiveness
Tax Forgiveness is Pennsylvania’s main relief program for lower-income households and can wipe out some or all of your state tax liability. You claim it by filing PA Schedule SP with your PA-40.12Commonwealth of Pennsylvania. Personal Income Tax – Tax Forgiveness
Forgiveness percentages run from 10 percent up to 100 percent depending on where your eligibility income lands on the table. A single filer with no dependents qualifies for full forgiveness at roughly $6,500 in eligibility income; a married couple with no dependents qualifies at about $13,000; each additional dependent raises the threshold by roughly $9,500. The percentage phases down in 10-percent steps as income rises. Even if nothing was withheld during the year, Tax Forgiveness can refund any tax you did pay.13Department of Revenue. Tax Forgiveness
Resident Credit for Taxes Paid to Another State
Pennsylvania residents who earn income in another state and pay income tax there can claim the Resident Credit to avoid being taxed twice on the same earnings. The credit equals the lesser of the tax actually paid to the other state or the Pennsylvania tax (3.07 percent) that would apply to that income. Keep records of the exact tax paid to each outside jurisdiction.
Child and Dependent Care Enhancement Credit
This refundable credit mirrors the federal Child and Dependent Care Tax Credit. You must claim the federal credit first; the Pennsylvania credit then equals 100 percent of the federal amount, with a maximum of $1,050 for one qualifying individual or $2,100 for two or more. Qualifying individuals include a dependent child under 13, a spouse unable to care for themselves, or a dependent in the same condition who lived with you more than half the year. Married couples must file jointly to claim it. Report it on PA Schedule DC and attach federal Form 2441 and Schedule 3 to your PA-40. Because the credit is refundable, it can produce a payment even if your Pennsylvania tax is already zero.14Pennsylvania Department of Revenue. Child and Dependent Care Enhancement Tax Credit
Deadlines, Extensions, and Estimated Payments
The PA-40 is due April 15 of the year following the tax year, the same day as your federal return.15Pennsylvania Department of Revenue. Tax Day Reminder – Filing Deadline An approved federal extension gives you an automatic six-month Pennsylvania extension to October 15; attach a copy of the federal extension when you submit the PA-40. The extension covers the paperwork only. Any tax owed is still due April 15, and interest and penalties start running on unpaid balances after that date.
If you have income no employer withholds tax on, such as freelance earnings, rental income, or investment gains, you may owe quarterly estimated payments. For the 2026 tax year, estimates are required when you expect to owe at least $430 of tax on income not subject to withholding (roughly $14,000 of such income) and your withholding and credits will cover less than 90 percent of your current-year liability or 100 percent of your prior-year liability, whichever is smaller. The 2026 quarterly due dates are April 15, June 15, September 15, and January 15, 2027. Farmers who get at least two-thirds of their gross income from farming can instead pay all estimated tax by January 15, 2027, or file the return and pay in full by March 1, 2027.16Pennsylvania Department of Revenue. 2026 Instructions for Estimating PA Personal Income Tax
How to File and Pay
The Department of Revenue runs a free online portal called myPATH (My Pennsylvania Tax Hub) where you can prepare and submit the PA-40 without paying for third-party software.17Commonwealth of Pennsylvania. File a Pennsylvania Income Tax Return Commercial tax software that supports Pennsylvania returns works too, and you can still file a paper PA-40 by mail. Electronic filing is faster and avoids transcription errors.
You can pay through myPATH by electronic funds transfer from a bank account or by credit card (the processor charges a convenience fee). A paper return can include a check or money order payable to the PA Department of Revenue.18Pennsylvania Department of Revenue. myPATH Pennsylvania Tax Hub Before you start, gather W-2s from every employer, 1099s for interest, dividends, and freelance income, and documentation of any tax paid to another state. Because each of the eight income classes is calculated separately, records organized by income type save time.
What Late Filing and Underpayment Cost
Miss the deadline without a valid extension and the Department of Revenue adds a penalty of 5 percent of the unpaid tax for the first month, plus 5 percent for each additional month or partial month the return stays unfiled, up to a combined 25 percent. The minimum penalty is $5.19Pennsylvania Code. 61 Pa. Code 121.26 – Penalties for Failure to File or for Filing a Late Return
Unpaid balances also accrue interest. For 2026 the annual interest rate on underpayments is 7 percent, set by the U.S. Secretary of the Treasury and applied from the original due date until payment.20Pennsylvania Department of Revenue. What Is the Current Interest Rate Willful tax evasion or filing a fraudulent return is a misdemeanor under Pennsylvania law, punishable by fines, imprisonment, or both, on top of the tax and interest owed.19Pennsylvania Code. 61 Pa. Code 121.26 – Penalties for Failure to File or for Filing a Late Return
The Local Tax You Still Owe
A PA-40 is not the whole picture. Nearly every municipality and school district in Pennsylvania also levies a local Earned Income Tax (EIT) on wages and net profits, and it is collected by local tax officers, not the Department of Revenue. Under Act 32, employers with Pennsylvania worksites must withhold and remit local EIT from your paycheck automatically.21PA Department of Community and Economic Development. Local Income Tax Information
Local EIT rates vary by municipality and typically run between about 1 percent and 2 percent of earned income, though some areas sit above or below that. Philadelphia runs its own wage tax at considerably higher rates: 3.74 percent for city residents and 3.43 percent for nonresidents working in the city.22City of Philadelphia. Wage Tax (Employers) When you change jobs or move, give your employer updated home and work addresses so withholding routes to the correct jurisdiction; a mismatch creates a balance due at local filing time rather than any savings.