Pennsylvania Paycheck Taxes Explained (2026)
Pennsylvania uses a flat state income tax of 3.07% on all earned income — one of the simplest state tax systems in the US. However, PA is unique in several critical ways that affect your take-home pay:
- No standard deduction at the state level: PA taxes your gross wages without any standard deduction or personal exemption reduction.
- 401(k) contributions are NOT deductible: Unlike federal and most state systems, PA taxes your gross wages before pre-tax retirement contributions. Your 401(k) saves federal taxes but not PA state tax.
- Local Earned Income Tax (EIT): Nearly every PA municipality levies a local EIT on top of the 3.07% state rate. Rates range from 0.5% to 3.98% (Philadelphia).
- No tax on retirement distributions: The trade-off — PA does not tax Social Security, pensions, 401(k)/IRA withdrawals, or other retirement income.
Common Local EIT Rates in Pennsylvania
| Location | Local EIT Rate | Combined (State + Local) |
|---|---|---|
| Philadelphia | 3.75% (wage tax) | 6.82% |
| Pittsburgh | 3.00% | 6.07% |
| Scranton | 3.40% | 6.47% |
| Reading | 3.60% | 6.67% |
| Allentown suburbs | 1.0% – 1.5% | 4.07% – 4.57% |
| Chester County suburbs | 1.0% | 4.07% |
| Lancaster County | 1.0% – 1.5% | 4.07% – 4.57% |
| Rural PA municipalities | 0.5% – 1.0% | 3.57% – 4.07% |
PA vs. Neighboring States: Take-Home Comparison ($75K Single)
| State | State Tax | Local Tax | Est. Annual Net |
|---|---|---|---|
| PA (1% local) | ~$2,303 (3.07%) | ~$750 | ~$58,200 |
| PA (Philadelphia) | ~$2,303 | ~$2,813 | ~$56,100 |
| New York (non-NYC) | ~$3,620 | $0 | ~$57,600 |
| New Jersey | ~$2,400 | $0 | ~$58,800 |
| Ohio | ~$1,780 | ~$1,125 (local) | ~$58,300 |
| Delaware | ~$3,100 | $0 (Wilmington: ~$750) | ~$58,100 |
Tips to Optimize Your PA Take-Home Pay
- 401(k) still saves federal taxes: Even though PA doesn't recognize 401(k) deductions, your federal savings at 22%+ marginal rate far outweigh the PA non-deductibility.
- Plan for retirement in PA: PA's exemption of retirement income makes it attractive for retirement — you pay state tax on contributions now but no state tax on distributions later.
- Check your local EIT rate: Moving even one municipality over can change your EIT by 0.5–1%. Use the PA DCED municipal tax rate finder to verify your exact rate.
- Review W-4 and PA REV-419: Ensure both federal and PA state withholding forms reflect your filing status to avoid over-withholding.
Frequently Asked Questions
What is the Pennsylvania state income tax rate?
Pennsylvania has a flat state income tax of 3.07% on all earned income. No brackets, no standard deduction. Every dollar of gross wages is taxed at 3.07% at the state level.
What is the PA local Earned Income Tax (EIT)?
A local tax on earned income ranging from 0.5% to 3.98% depending on your municipality. Philadelphia charges 3.75% (wage tax). Most suburban communities charge 1–2%. This is in addition to the 3.07% state tax.
How much take-home on $75K in PA?
With 1% local EIT (single, bi-weekly, no pre-tax deductions): federal ~$8,028, PA state ~$2,303, local ~$750, SS ~$4,650, Medicare ~$1,088. Net: ~$58,181/year (~$2,238/bi-weekly paycheck).
Does PA tax 401(k) contributions?
PA taxes gross wages — 401(k) contributions do NOT reduce PA state taxable income. However, PA does not tax 401(k) distributions in retirement, which is a significant long-term benefit.
Does PA tax retirement income?
No. PA does not tax Social Security, pensions, 401(k)/IRA withdrawals, or annuities. This makes PA one of the most tax-friendly states for retirees.
What is the Philadelphia wage tax?
Philadelphia charges 3.75% for residents and 3.44% for non-residents working in the city. Combined with 3.07% state tax, Philadelphia residents pay 6.82% in state + local income tax.
What is the PA SUI employee deduction?
PA withholds 0.06% from employee wages for State Unemployment Insurance (SUI). On $70,000 this is about $42/year — a very small deduction.
How does PA compare to neighboring states?
PA's flat 3.07% + local EIT is generally competitive. NJ has no local income tax but higher state rates. NY has much higher state rates + NYC local tax. Delaware has no sales tax but higher income tax rates.