Pennsylvania Personal Income Tax Laws

Most states, including Pennsylvania, levy a personal income tax on residents in addition to federal income taxes. Pennsylvania personal income tax law requires individuals, estates, and trusts within the state to pay 3.07 percent on all taxable net income.

The basics of Pennsylvania personal income tax law are summarized in the following table, while additional information on the subject follows. See FindLaw's extensive Tax Law section for more information.

Code Section Tit. 72 ยงยง7301, et seq.
Who is Required to File Resident and nonresident individuals, estates, or trusts; Nonresidents only pay for portion of income derived from Pennsylvania sources; Partnerships and associations are not taxable; Local taxes may be required
Rate 3.07%
Federal Income Tax Deductible No
Federal Income Used as Basis No

Who is Required to File Income Tax in Pennsylvania?

Pennsylvania Residents

Individuals:

Individuals living in Pennsylvania must pay Pennsylvania income taxes on all of their income, regardless of whether or not the income was earned in Pennsylvania. This may also include income that was earned in a state that does not have personal income taxes. Whether you qualify as a Pennsylvania resident depends on a number of factors. If you are concerned about your residency, it would be best to speak with a qualified tax attorney to get a definitive answer. Failing to pay taxes can come with hefty fines.

Corporations:

Pennsylvania corporations, and foreign corporations, must pay income tax in Pennsylvania for the privilege of conducting business in that state. Common reasons for paying corporate income tax in Pennsylvania are carrying on business in Pennsylvania, having capital or property employed or used in Pennsylvania, or merely owning property in Pennsylvania. A Pennsylvania tax attorney should be able to help you with the details on what a corporation must pay taxes on in the state.

Pennsylvania Non-Residents

Nonresidents must pay Pennsylvania income tax on income they earn within the state. Just because someone makes some money in the state does not mean that they have to pay Pennsylvania income tax on their income earned outside the state.

Estates

Sometimes, after a person passes away, their property will continue to earn money before it is passed to the heirs. This income, and any income earned in the year the decedent passed away, will have to be accounted for in a Pennsylvania tax return. This tax return is generally done by the estate's executor, who is normally named in the decedent's will.

Trusts

A trust is a relationship whereby a grantor gives property to a trustee to administer for the benefit of a beneficiary. Part of the trustee's duties includes paying taxes on income derived from the property in their care. The beneficiary may also have to pay taxes on any income or distributions from the trust.

Tax Rate

The current Pennsylvania income tax rate is 3.07%, and this changes year to year.

Partnerships and Associations

Partnerships and associations do not have to pay taxes in Pennsylvania, as their members will pay taxes on income received from the partnership or association in their individual tax returns.

Tax law can be very complex. Unlike many other areas of the law, tax law changes every year. This means that you should speak with an attorney who has up-to-date knowledge of Pennsylvania income tax laws if you have any questions about your tax obligations in Pennsylvania. There are many attorneys throughout Pennsylvania with tax law experience who may be able to help.

Next Steps: Search for a Local Attorney

Contact a qualified attorney.