Pennsylvania Income Tax Rates & Brackets (Tax Year 2025 — Filed in 2026)
⚠️Informational only — not legal or tax advice.
Tax year covered: 2025 (returns filed in 2026)
Applies to: Income earned January 1 – December 31, 2025
Returns filed: January – April 2026
Last verified: February 12, 2026
Table of Contents
- Quick Reference
- Key Takeaways
- Quick Questions
- Pennsylvania Income Tax Rates and Brackets (2026)
- Statutory Authority
- Who Must File Pennsylvania Income Tax
- What Income Is Taxable in Pennsylvania
- Standard Deduction and Exemptions
- Filing Deadlines
- Filing Options
- Local Income Taxes
- Pennsylvania Income Tax Credits
- Tax Residency vs Domicile in Pennsylvania
- Common Residency Scenarios
- Remote Workers and Multi-State Taxation
- Reciprocal Agreements
- Multi-State Tax Filing
- Interstate Tax Risk Indicator
- Common Filing Situations - Multi-State
- Military Personnel
- Retirees
- Students
- Deceased Taxpayers (Decedents)
- Forms & Publications
- Penalties and Interest
- Audit and Documentation
- Resources
- Where to Check for Updates
- Tax Glossary
- Update History
Quick Reference
Does Pennsylvania have income tax? Yes
Tax structure: Flat rate
Tax rate: 3.07%
Standard deduction: None
Personal exemption: None
Local income tax: Yes – over 2,500 local jurisdictions levy earned income tax (EIT)
Official source: https://www.pa.gov/agencies/revenue/resources/tax-types-and-information/personal-income-tax
Key Takeaways
- Residents: Pennsylvania residents pay 3.07% state income tax on income from all sources
- Non-residents: Non-residents pay Pennsylvania income tax only on Pennsylvania-source income
- Tax structure: Flat 3.07% rate on eight classes of income (no brackets or graduated rates)
- No standard deduction or personal exemption: Pennsylvania does not provide standard deduction, itemized deductions, or personal exemptions
- Local income taxes: Pennsylvania has over 2,500 municipal jurisdictions with local earned income taxes (EIT) ranging from 0% to approximately 3.924%
- Reciprocity: Pennsylvania has reciprocal agreements with Indiana, Maryland, New Jersey, Ohio, Virginia, and West Virginia
- Primary forms: PA-40 (resident and non-resident returns use same form)
Quick Questions About Pennsylvania Income Tax
What is the Pennsylvania income tax rate for 2025?
Pennsylvania has a flat income tax rate of 3.07% on all taxable income classes. Unlike most states, Pennsylvania does not have graduated tax brackets – all taxpayers pay the same 3.07% rate regardless of income level.
Does Pennsylvania have state income tax?
Yes. Pennsylvania levies a flat 3.07% personal income tax on eight classes of income for residents and on Pennsylvania-source income for non-residents.
What are the income tax brackets in Pennsylvania?
Pennsylvania does not have income tax brackets. The state uses a flat tax rate of 3.07% applied to all taxable income regardless of amount or filing status.
Is Social Security taxed in Pennsylvania?
No. Social Security benefits are not taxable for Pennsylvania personal income tax purposes.
Does Pennsylvania tax retirement income?
Pennsylvania does not tax distributions from qualified retirement plans when received as old age or retirement benefits. This includes most distributions from 401(k), IRA, pension plans, and government retirement systems when the recipient has reached retirement eligibility. Early withdrawals subject to federal penalties may be taxable.
Do I need to file a Pennsylvania income tax return?
You must file a Pennsylvania personal income tax return if you realized income generating $1 or more in tax, even if no tax is due (for example, when an employee receives compensation where tax is withheld).
Source: https://www.pa.gov/agencies/revenue/resources/tax-types-and-information/personal-income-tax
Pennsylvania Income Tax Rates and Brackets (2026)
The following tax rates and brackets apply to income earned in 2025, reported on tax returns filed in 2026.
| Rate Snapshot | |
|---|---|
| Tax Attribute | Amount/Status |
| State Tax Rate | 3.07% (flat rate) |
| Tax Structure | Flat rate (no brackets) |
| Standard Deduction | None |
| Personal Exemption | None |
| State Income Tax | Yes |
| Local Income Tax | Yes (varies by municipality) |
| Reciprocal States | 6 states (IN, MD, NJ, OH, VA, WV) |
Source: https://www.pa.gov/agencies/revenue/resources/tax-types-and-information/personal-income-tax
Pennsylvania Flat Tax Rate Structure
Pennsylvania uses a flat tax rate of 3.07% applied to eight classes of income:
- Compensation (wages, salaries, bonuses, commissions)
- Interest income
- Dividends
- Net profits from business, profession, or farm
- Net gains or income from disposition of property
- Net gains or income from rents, royalties, patents, and copyrights
- Income derived through estates or trusts
- Gambling and lottery winnings (cash prizes from PA Lottery; non-cash prizes exempt)
Critical Rule: A loss in one class of income may not offset gains in another class. Losses cannot be carried backward or forward to other tax years.
Source: https://www.pa.gov/agencies/revenue/resources/tax-types-and-information/personal-income-tax
Statutory Authority
State income tax in Pennsylvania is authorized under the following legal framework:
Constitutional Authority:
Pennsylvania Constitution authorizes the General Assembly to impose taxes for state purposes.
Statutory Authority:
- Tax Reform Code of 1971 (Act 2 of March 4, 1971, P.L. 6, as amended)
- Title 72 P.S. (Pennsylvania Consolidated Statutes, Title 72 – Taxation and Fiscal Affairs)
- Article III – Personal Income Tax (72 P.S. §§ 7301-7361)
Administrative Regulations:
- Pennsylvania Code Title 61 (Revenue)
- Chapter 101 – Personal Income Tax
Legislative History:
- Original enactment: 1971 (Tax Reform Code)
- Current flat rate of 3.07% effective: Tax Year 2004-present
- Rate history: 2.8% (1971-1982), 2.2% (1983-1991), 2.8% (1991-2003), 2.8% (2003), 3.07% (2004-present)
Pennsylvania’s personal income tax applies to individuals, estates, trusts, partnerships, S corporations, business trusts, and limited liability companies not federally taxed as corporations.
Source: https://www.pa.gov/agencies/revenue/resources/tax-types-and-information/personal-income-tax
Legislative Code: https://www.legis.state.pa.us/cfdocs/legis/LI/consCheck.cfm?txtType=HTM&ttl=72
Who Must File Pennsylvania Income Tax
Residents
Pennsylvania law requires residents to file a state income tax return if they realized income generating $1 or more in tax, even if no tax is due.
Key filing threshold: Any income that generates tax liability requires filing, regardless of amount. This includes situations where an employer withheld Pennsylvania tax from compensation.
Residents are taxed on:
- All income from all sources
- Income earned both inside and outside Pennsylvania
- All eight classes of Pennsylvania taxable income
Part-Year Residents
Part-year residents must file a Pennsylvania personal income tax return if they were a Pennsylvania resident for part of the year.
Tax treatment:
- Report all income earned during the period of Pennsylvania residency
- Exclude income earned while a resident of another state
- Not subject to Pennsylvania tax on ordinary interest, dividends, and gains on intangible property earned while a non-resident
Form: Use PA-40 and fill in the oval for part-year resident status
Non-Residents
Non-residents must file if they had income from Pennsylvania sources during the tax year.
Pennsylvania-source income includes:
- Wages earned while physically working in Pennsylvania
- Business income from Pennsylvania operations
- Rental income from Pennsylvania property
- Net profits from business conducted in Pennsylvania
- Income from Pennsylvania partnerships or S corporations (via Schedule NRK-1)
Physical presence rule: For compensation, income is sourced to Pennsylvania based on where work is physically performed.
Reciprocal agreement exception: Residents of Indiana, Maryland, New Jersey, Ohio, Virginia, and West Virginia who work in Pennsylvania may be exempt under reciprocal agreements if proper exemption certificates are filed.
Form: Use PA-40 (same form as residents) and fill in the oval for non-resident status
What Income Is Taxable in Pennsylvania
Pennsylvania taxes eight specific classes of income. Each class is taxed separately, and losses in one class cannot offset gains in another.
Eight Classes of Pennsylvania Taxable Income
Class 1: Compensation
Includes wages, salaries, bonuses, commissions, tips, fees, incentive payments, and other compensation for services.
Taxable compensation includes:
- Wages and salaries from employment
- Bonuses and commissions
- Tips and gratuities
- Stock options (when exercised)
- Employee benefits considered taxable compensation
- Severance pay
- Vacation/sick leave payments
- Jury duty pay
- Military pay for services within Pennsylvania (active duty outside Pennsylvania is exempt)
Excluded from compensation:
- Active duty military pay earned outside Pennsylvania
- Qualified retirement benefits (when meeting eligibility criteria)
- Disability benefits from workers’ compensation
- Unemployment compensation
- Public assistance
- Certain qualified fringe benefits
Class 2: Interest Income
Taxable at 3.07% flat rate. Includes interest from:
- Savings accounts
- Certificates of deposit
- Bonds (corporate, municipal, U.S. government)
- Money market accounts
- Interest on loans made to others
- Tax refund interest
Source: https://www.pa.gov/agencies/revenue/resources/tax-types-and-information/personal-income-tax
Class 3: Dividends
Taxable at 3.07% flat rate. Includes:
- Stock dividends
- Mutual fund dividends
- Real estate investment trust (REIT) dividends
- Money market fund dividends
Source: https://www.pa.gov/agencies/revenue/resources/tax-types-and-information/personal-income-tax
Class 4: Net Profits from Business, Profession, or Farm
Net income from operating a business (other than a corporation), professional practice, or farm.
Determination: Net profits are calculated on either a cash or accrual basis according to accepted accounting principles.
Self-employment: Self-employment income is reported in this class, not as compensation.
Source: https://www.pa.gov/agencies/revenue/resources/tax-types-and-information/personal-income-tax
Class 5: Net Gains or Income from Disposition of Property
Includes capital gains from sale of:
- Stocks and bonds
- Real estate (except principal residence exemption)
- Business property
- Intangible assets
Principal residence exemption: Capital gains from sale of principal residence are exempt if ownership and use requirements are satisfied (generally mirrors federal rules).
Source: https://www.pa.gov/agencies/revenue/resources/tax-types-and-information/personal-income-tax
Class 6: Net Gains or Income from Rents, Royalties, Patents, and Copyrights
Includes:
- Rental income from real estate
- Royalty income from oil, gas, minerals
- Patent royalties
- Copyright royalties
Source: https://www.pa.gov/agencies/revenue/resources/tax-types-and-information/personal-income-tax
Class 7: Estate or Trust Income
Income distributed from estates or trusts to beneficiaries.
Source: https://www.pa.gov/agencies/revenue/resources/tax-types-and-information/personal-income-tax
Class 8: Gambling and Lottery Winnings
Taxable:
- Cash prizes from Pennsylvania Lottery
- Casino gambling winnings
- Racetrack winnings
- Sports betting winnings
- Online gambling winnings
Not taxable:
- Non-cash prizes from Pennsylvania Lottery
Source: https://www.pa.gov/agencies/revenue/resources/tax-types-and-information/personal-income-tax
Social Security Benefits
Pennsylvania does NOT tax Social Security benefits.
All Social Security retirement, disability, and survivor benefits are exempt from Pennsylvania personal income tax.
Military Pay and Benefits
Active Duty Military Pay
Exempt from Pennsylvania tax:
- Military pay for federal active duty service performed outside Pennsylvania
- Military pay for federal active duty training outside Pennsylvania
- Pay for active state duty for emergency within or outside Pennsylvania
Taxable for Pennsylvania residents:
- Military pay for service performed within Pennsylvania (unless for emergency active state duty)
- Weekend drill pay (National Guard and Reserves) performed in Pennsylvania
Nonresident military personnel:
- Military personnel domiciled in other states serving in Pennsylvania due to military orders are exempt from Pennsylvania tax on their military pay
Proof required: Pennsylvania residents must provide copies of military orders showing federal active duty service outside Pennsylvania to exclude military pay from Pennsylvania taxation.
Military Retirement Pay
Pennsylvania does NOT tax qualified military retirement pay.
Distributions from military retirement plans are exempt when received as retirement benefits after:
- Reaching specific age, OR
- Completing stated period of employment
This includes:
- Retired or retainer pay under Chapter 71 of Title 10, U.S. Code
- State Employees’ Retirement System military service pensions
- Other qualified military pension plans
Retirement Income
Pennsylvania provides favorable treatment for retirement income.
Qualified Retirement Plan Distributions
NOT TAXABLE when received as retirement benefits:
- Distributions from 401(k), 403(b), 457 plans
- Traditional IRA distributions
- Roth IRA distributions
- Pension plan distributions
- State Employees’ Retirement System (SERS)
- Pennsylvania School Employees’ Retirement System (PSERS)
- Pennsylvania Municipal Retirement System (PMRS)
- U.S. Civil Service Commission Retirement Disability Plan
- Federal government retirement plans
- Private employer pension plans
Requirements for exemption:
- Payments must come from an eligible Pennsylvania retirement plan
- Paid to persons retired from service after reaching specific age or after stated period of employment
- Cannot be subject to federal early withdrawal penalty
Contributions not deductible: Pennsylvania does not allow deductions for IRA contributions, 401(k) contributions, or other retirement plan contributions.
Early Withdrawal Penalties
Distributions from retirement accounts subject to the federal 10% early withdrawal penalty may be taxable for Pennsylvania purposes, as they do not meet the definition of “retirement benefits.”
Standard Deduction and Exemptions
Standard Deduction
Pennsylvania does NOT provide a standard deduction.
Unlike federal income tax and most other states, Pennsylvania does not allow taxpayers to claim a standard deduction amount.
Personal Exemptions
Pennsylvania does NOT allow personal exemptions.
There are no personal exemptions for:
- Taxpayer
- Spouse
- Dependents
Itemized Deductions
Pennsylvania does NOT allow itemized deductions such as:
- Mortgage interest
- State and local taxes
- Charitable contributions
- Medical expenses
- Other federal itemized deductions
Exception – Unreimbursed employee business expenses: Pennsylvania allows deductions for unreimbursed employee business expenses that are ordinary, actual, reasonable, necessary, and directly related to the taxpayer’s occupation or employment. These are deducted directly from compensation, not as itemized deductions.
Allowed Deductions (Limited)
Pennsylvania law allows only three specific deductions against income:
- Medical Savings Account (MSA) contributions
- Health Savings Account (HSA) contributions
- IRC Section 529 tuition account program contributions
These are reported on PA Schedule O.
Filing Deadlines
Regular Deadline
April 15, 2026 for Tax Year 2025 returns
Tax returns for income earned January 1 – December 31, 2025 are due by midnight on April 15, 2026.
Proof of timely filing: The U.S. Postal Service postmark date on the envelope is proof of timely filing for paper returns.
Extension Deadline
October 15, 2026
Pennsylvania grants an automatic extension to October 15, 2026 for filing Tax Year 2025 returns.
Extension requirements:
- No separate extension form required if you have a federal extension
- Payment required: Any estimated tax owed must be paid by April 15, 2026 to avoid penalties
- Late payment penalties and interest will apply to unpaid tax even with an extension
Note: An extension to file is not an extension to pay. Interest and penalties accrue on unpaid balances from April 15, 2026.
Estimated Tax Payment Deadlines
If you have income not subject to withholding exceeding certain thresholds, quarterly estimated tax payments are due:
2025 Estimated Tax Payment Deadlines (for Tax Year 2025):
- Q1: April 15, 2025 (already passed)
- Q2: June 15, 2025 (already passed)
- Q3: September 15, 2025 (already passed)
- Q4: January 15, 2026
2026 Estimated Tax Payment Deadlines (for Tax Year 2026):
- Q1: April 15, 2026
- Q2: June 15, 2026
- Q3: September 15, 2026
- Q4: January 15, 2027
Estimated tax threshold: For Tax Year 2025, estimated payments were required if non-withheld income exceeded $11,000. For Tax Year 2026, the threshold increases to $14,000.
Filing Options for Pennsylvania Income Tax
Online Filing (E-File)
Electronic filing is available through:
Pennsylvania Official Online Portal:
myPATH – https://mypath.pa.gov
Free online filing system provided by the Pennsylvania Department of Revenue
IRS-Approved Tax Software:
Pennsylvania returns can be filed through:
- TurboTax
- H&R Block
- TaxAct
- Other IRS-approved software that supports Pennsylvania state returns
Free File Options:
Pennsylvania participates in free e-file programs for eligible taxpayers.
Source: https://www.pa.gov/agencies/revenue/resources/tax-types-and-information/personal-income-tax
Paper Filing
Paper forms are available for download and mail filing.
Primary Form:
PA-40 – Pennsylvania Personal Income Tax Return
Used by residents, part-year residents, and non-residents
Download Location:
https://www.pa.gov/agencies/revenue/forms-and-publications/forms-for-individuals
Mailing Addresses:
With payment:
PA PERSONAL INCOME TAX
PAYMENT ENCLOSED
PO BOX 280405
HARRISBURG PA 17128-0405
Without payment (refund or no balance due):
PA PERSONAL INCOME TAX
PO BOX 280406
HARRISBURG PA 17128-0406
Farmers:
PA PERSONAL INCOME TAX – FARMERS
PO BOX 280409
HARRISBURG PA 17128-0409
Tax Preparer Options
Licensed tax professionals familiar with Pennsylvania tax law include:
- CPA (Certified Public Accountant)
- Enrolled Agent (EA)
- Tax Attorney
- VITA (Volunteer Income Tax Assistance) – Free tax preparation for low-income taxpayers
- TCE (Tax Counseling for the Elderly) – Free tax preparation for seniors
VITA/TCE Locations:
Call the IRS at 1-800-829-1040 to find free tax assistance locations in Pennsylvania
Local Income Taxes in Pennsylvania
Pennsylvania is unique among U.S. states in having extensive local income taxation. Over 2,500 municipalities and school districts levy local earned income taxes (EIT) and local services taxes (LST).
Critical Understanding
Local income taxes are SEPARATE from state income tax.
- State income tax: 3.07% flat rate (paid to Pennsylvania Department of Revenue)
- Local income taxes: Vary by municipality (paid to local tax collectors)
- Both must be paid – they do not offset each other
Types of Local Income Taxes
1. Earned Income Tax (EIT)
What it taxes: Wages, salaries, commissions, bonuses, net profits from business
Tax base: Same definition of “earned income” as state compensation (Class 1) and net profits (Class 4)
Rate range: Typically 0.5% to 3.924% (varies by municipality and school district)
How it works:
- Resident EIT: Paid to municipality where you live (based on home address)
- Non-resident EIT: Paid to municipality where you work (based on work address)
- Split rate system: Most jurisdictions split the EIT between municipality and school district
Source: https://dced.pa.gov/local-government/local-income-tax-information/
2. Local Services Tax (LST)
What it taxes: Flat annual tax on individuals employed within a taxing jurisdiction
Maximum rate: $52 per year (set by state law)
Tax base: Based on where you work, not where you live
Collection: Usually withheld by employer throughout the year
Low-income exemption: Individuals with earned income less than $12,000 annually are exempt
Source: https://dced.pa.gov/local-government/local-income-tax-information/
Finding Your Local Tax Rates
Official Rate Lookup Tool
Pennsylvania Department of Community & Economic Development provides an address-based lookup tool:
Municipal Statistics Address Search:
https://munstats.pa.gov/public/findlocaltax.aspx
What you need:
- Your home address (for resident EIT rate)
- Your work address (for non-resident EIT and LST rates)
The tool provides:
- Political Subdivision (PSD) Code
- Resident EIT rate
- Non-resident EIT rate
- Local Services Tax (LST) amount
- School district information
Source: https://dced.pa.gov/local-government/local-income-tax-information/
Tax Registers
Official Tax Registers (published annually):
https://munstats.pa.gov – EIT/PIT/LST Tax Registers
Real-Time Tax Registers:
Updated daily with most current rates
Historic Tax Registers:
Archives of previous years’ rates
Source: https://munstats.pa.gov
Major Municipality Local Tax Rates (Examples)
Pennsylvania has over 2,500 jurisdictions with local taxes. Below are examples from major population centers. Always verify your specific rate using the official lookup tool.
Philadelphia
Wage Tax Rates (Tax Year 2025):
- Residents: 3.8398% of gross wages
- Non-residents working in Philadelphia: 3.4481% of gross wages
Note: Philadelphia’s wage tax is among the highest local income taxes in Pennsylvania.
Who collects: City of Philadelphia Department of Revenue (separate from state)
Special credit rule: Philadelphia wage tax can be credited against local earned income tax owed to another Pennsylvania municipality (but not against state tax).
Source: City of Philadelphia (rates verified through official municipal sources)
Pittsburgh
Earned Income Tax (Tax Year 2025):
- Residents: 3% (1% city + 2% school district)
- Non-residents: 1% (city portion only)
Local Services Tax: $52 annually
Source: City of Pittsburgh (rates verified through official municipal sources)
Allentown
Earned Income Tax (Tax Year 2025):
- Residents: Approximately 1.5% (varies by school district)
- Non-residents: Approximately 1%
Note: Rates vary by specific school district within the Allentown area.
Reading
Earned Income Tax (Tax Year 2025):
- Residents: Approximately 3.6% (1% city + school district portion)
- Non-residents: 1%
Erie
Earned Income Tax (Tax Year 2025):
- Residents: Approximately 1.65% (0.65% city + 1% school district)
- Non-residents: 0.65%
CRITICAL REMINDER: These are examples only. Pennsylvania has over 2,500 local taxing jurisdictions with different rates. You must use the official lookup tool to determine your actual local tax rates:
https://munstats.pa.gov/public/findlocaltax.aspx
How Local Earned Income Tax Works
Scenario 1: Living and Working in the Same Municipality
Example:
- You live in Harrisburg
- You work in Harrisburg
- Harrisburg resident EIT rate: 2%
Result: You pay 2% local earned income tax to Harrisburg on all wages and net profits.
Scenario 2: Living and Working in Different Pennsylvania Municipalities
Example:
- You live in Lower Merion Township (resident EIT: 1.25%)
- You work in Philadelphia (non-resident wage tax: 3.4481%)
Result:
- Pay 3.4481% to Philadelphia on wages earned in Philadelphia
- Pay 1.25% to Lower Merion on other earned income (net profits, etc.)
- No double taxation – resident municipality credit system prevents double taxation on wages
Credit mechanism: Your home municipality gives you credit for tax paid to work municipality up to the home municipality’s rate.
Source: https://dced.pa.gov/local-government/local-income-tax-information/
Scenario 3: Pennsylvania Resident Working in Another State
Example:
- You live in Erie, PA (resident EIT: 1.65%)
- You work in Cleveland, OH (reciprocal state)
Result:
- Pay Pennsylvania state tax (3.07%) on all income
- Pay Erie local EIT (1.65%) on all earned income
- Do not pay Ohio state tax (reciprocal agreement)
- Do not pay Cleveland local tax (reciprocal agreement)
Scenario 4: Non-Resident Working in Pennsylvania
Example:
- You live in Wilmington, DE
- You work in Chester, PA (non-resident EIT: 1%)
Result:
- Pay Pennsylvania state tax (3.07%) on Pennsylvania wages only
- Pay Chester local EIT (1%) on Pennsylvania wages
- Pay Delaware state tax on same income (claim PA credit on DE return)
Employer Withholding Requirements for Local Taxes
Employer Obligations
All Pennsylvania employers must:
- Withhold local earned income tax (EIT) from employee wages
- Withhold local services tax (LST) from employee wages
- Remit to appropriate local tax collector
- Report on annual W-2 forms
How employers determine rates:
- Employee’s home address determines resident EIT rate
- Employee’s work address determines non-resident EIT and LST
Residency Certification Form:
Employers must obtain completed residency certification forms from employees showing home and work addresses.
Source: https://dced.pa.gov/local-government/local-income-tax-information/
Tax Collectors (Act 32 of 2008)
Pennsylvania law consolidated local tax collection under Act 32 of 2008.
Designated tax collectors:
Each county has designated tax collection districts and approved collectors.
Employer responsibilities:
- Determine correct tax collector based on employee work location
- Remit withheld taxes to designated collector
- File quarterly and annual returns
Source: https://dced.pa.gov/local-government/local-income-tax-information/
Out-of-State Employers
Employers located outside Pennsylvania:
If you have employees working physically in Pennsylvania:
- Must register with Pennsylvania Department of Revenue for state withholding
- Must withhold and remit Pennsylvania state tax (3.07%)
- Must withhold and remit local EIT and LST for Pennsylvania work locations
Remote work considerations: If employee works from home in Pennsylvania for out-of-state employer, the employee’s home location determines local tax obligations.
Source: https://www.pa.gov/agencies/revenue/resources/tax-types-and-information/employer-withholding
Pennsylvania Income Tax Credits
1. Working Pennsylvanians Tax Credit (WPTC)
NEW for Tax Year 2025 – Created in 2025-26 budget
Credit amount: 10% of federal Earned Income Tax Credit (EITC)
Maximum credit: $805
Eligibility:
Automatically qualified if you receive the federal EITC
How it works:
- Claim federal EITC on your federal Form 1040
- File your PA-40 return
- Pennsylvania Department of Revenue automatically calculates your WPTC
- Credit is refundable (you can receive it even if you owe no Pennsylvania tax)
Number of beneficiaries: Approximately 940,000 Pennsylvanians will benefit
Total relief: $193 million annually
Effective: Tax Year 2025 (returns filed in 2026)
WPTC Calculator
Pennsylvania provides an online calculator to estimate your credit:
Online Calculator:
https://www.pa.gov/agencies/revenue/resources/tax-types-and-information/personal-income-tax/working-pennsylvanians-tax-credit
What you need:
- Filing status
- Number of qualifying children
- Adjusted gross income
Note: Calculator provides estimates only. Actual credit determined when filing return.
2. Tax Forgiveness Credit (Special Tax Forgiveness)
Purpose: Reduce or eliminate tax liability for low-income taxpayers
Eligibility: Based on total income and family size
How it works:
- Calculated automatically by Pennsylvania Department of Revenue
- Reduces Pennsylvania tax liability to zero for qualifying taxpayers
- Taxpayer must file PA Schedule SP with PA-40 return
Income thresholds (Tax Year 2025):
Thresholds vary by number of dependents and are adjusted annually.
Note: Even if you qualify for tax forgiveness, you must file a return to claim the credit.
Form: PA Schedule SP (Special Tax Forgiveness)
3. Credit for Taxes Paid to Other States
Purpose: Prevent double taxation for Pennsylvania residents earning income in other states
Eligibility:
Pennsylvania resident taxpayers who paid income tax to another state on the same income that is also subject to Pennsylvania tax
Amount of credit:
The lesser of:
- Actual tax paid to other state, OR
- Pennsylvania tax that would be due on that income (income × 3.07%)
Limitations:
- Credit allowed only for income taxable by both states
- No credit for Pennsylvania-source income taxed by other state
- No credit for intangible income that cannot be sourced to a specific state
- Foreign country taxes not allowed for tax years beginning January 1, 2014 or after
Form: PA Schedule G-L (Credit for Taxes Paid to Other States)
Required documentation:
- Copy of other state’s tax return
- W-2 forms showing withholding to other state
Credit Calculation Example
Scenario:
- Pennsylvania resident
- Earned $50,000 in Maryland
- Paid $2,500 Maryland state tax
- Pennsylvania tax on same income: $50,000 × 3.07% = $1,535
Credit allowed: $1,535 (the lesser amount)
Result:
- Pennsylvania tax before credit: $1,535
- Credit for taxes paid to Maryland: $1,535
- Pennsylvania tax after credit: $0
- Maryland tax remains: $2,500 (no Pennsylvania credit for amount exceeding PA tax rate)
4. Child and Dependent Care Enhancement Tax Credit
Amount: 100% of federal Child and Dependent Care Tax Credit (matches federal credit dollar-for-dollar)
Eligibility: Same as federal requirements
- Must claim federal Child and Dependent Care Credit on federal return
- Care must be for qualifying child under 13 or disabled dependent
- Care enables you (and spouse if married) to work or look for work
Maximum federal credit: Varies based on income and expenses
Pennsylvania enhancement: Pennsylvania provides 100% match of federal credit amount
2024 impact: Delivered $136.5 million to nearly 219,000 working families
How to claim:
- Claim federal credit on federal return
- Report on PA Schedule OC (Other Credits)
5. Property Tax/Rent Rebate Program (PTRR)
Note: This is a rebate program, not a tax credit against income tax. Administered separately from income tax system.
Purpose: Property tax and rent relief for older adults and people with disabilities
Eligibility:
- Age 65 or older, OR
- Widow/widower age 50 or older, OR
- Person with disabilities age 18 or older
Income limits: Vary annually; expanded significantly under Governor Shapiro administration
Rebate amounts: Up to maximum set by law (varies by income and property taxes paid)
2024 impact: Over 522,000 Pennsylvanians received over $319 million in rebates
How to apply:
- Separate application from income tax return
- Available through myPATH: https://mypath.pa.gov
- Application deadline: June 30, 2026 for 2025 property taxes/rent
- Rebates distributed starting July 1, 2026
6. Educational Improvement Tax Credit (EITC)
Type: Business tax credit (not individual)
Purpose: Businesses contribute to scholarship organizations and educational improvement organizations
Individual benefit: Students receive scholarships funded by business contributions
Note: This is a business credit program; individuals do not claim this credit on personal income tax returns
Source: https://www.pa.gov/agencies/revenue/incentives-credits-and-programs/tax-credits
7. Student Loan Interest Deduction
Amount: Up to $2,500 deduction for student loan interest paid
Eligibility: Mirrors federal student loan interest deduction requirements
How it works:
- Deduction from Pennsylvania taxable income
- Not a credit; reduces income subject to tax
- Must qualify for federal student loan interest deduction
Tax savings: Up to $76.75 (2,500 × 3.07%)
Business Tax Credits (Not Applicable to Individual Returns)
Pennsylvania offers numerous business tax credits. These are not claimed on individual PA-40 returns:
- Research and Development Tax Credit
- Historic Preservation Tax Credit
- Film Production Tax Credit
- Keystone Innovation Zone Tax Credit
- Neighborhood Assistance Program Tax Credit
- Resource Enhancement and Protection Tax Credit
Note: Pass-through entities (partnerships, S corporations) may pass credits to individual partners/shareholders. These would be reported on PA Schedule OC.
Source: https://www.pa.gov/agencies/revenue/incentives-credits-and-programs/tax-credits
Federal Credits NOT Allowed for Pennsylvania
Pennsylvania does not allow credits available on federal returns:
Federal credits NOT allowed in Pennsylvania:
- Federal Child Tax Credit
- Federal Additional Child Tax Credit
- Federal Education Credits (American Opportunity, Lifetime Learning)
- Federal Retirement Savings Contributions Credit (Saver’s Credit)
- Federal Residential Energy Credits
- Federal Adoption Credit
- Federal Premium Tax Credit (health insurance)
Why: Pennsylvania uses its own tax base and credit system independent of federal credits.
Credits vs. Deductions in Pennsylvania
Understanding the Difference
Tax Credit:
- Dollar-for-dollar reduction in tax owed
- Example: $500 credit reduces tax by $500
Tax Deduction:
- Reduces taxable income
- Tax savings = deduction × tax rate
- Example: $500 deduction × 3.07% = $15.35 tax savings
Pennsylvania’s approach:
- Very limited deductions (only MSA, HSA, 529 contributions)
- Very limited credits (primarily WPTC, tax forgiveness, other-state taxes)
- No standard deduction or personal exemptions
- No federal-style itemized deductions
Result: Pennsylvania’s tax base is broader but rate is lower (3.07%) than most states with graduated rates.
Credit for Local Income Taxes Paid to Other Jurisdictions
Philadelphia Wage Tax Credit
Special rule: Wage tax paid to Philadelphia may be used as a credit toward local earned income tax liability in other Pennsylvania municipalities.
How it works:
- Pay Philadelphia wage tax (resident or non-resident rate)
- If you also owe EIT to another Pennsylvania municipality (typically if you move during year or have other earned income), Philadelphia wage tax paid can offset that liability
Limitation: No refunds or credits for overpayments to Philadelphia
Documentation required:
- Copy of W-2 showing Philadelphia wage tax withheld
- Verification of taxes paid
Source: https://dced.pa.gov/download/gclgs-32-1-2014f-pdf/?wpdmdl=57777
Credit for Taxes Paid to Other Political Subdivisions
Purpose: Prevent double local taxation when working across Pennsylvania jurisdictional lines
How it works:
- Pay non-resident EIT to municipality where you work
- Receive credit on resident EIT to municipality where you live
- Credit limited to lesser of tax paid or tax owed
Example:
- Live in Municipality A (resident EIT: 1%)
- Work in Municipality B (non-resident EIT: 1.5%)
- Earn $50,000
Tax calculation:
- Owe Municipality B: $750 (50,000 × 1.5%)
- Owe Municipality A: $500 (50,000 × 1%) before credit
- Credit from B: $500
- Net owe to A: $0
- Net owe to B: $750
- Total paid: $750 (not $1,250)
Source: https://dced.pa.gov/download/gclgs-32-1-2014f-pdf/?wpdmdl=57777
Where to Check for Tax Credit Updates
Pennsylvania Department of Revenue – Tax Credits Page:
https://www.pa.gov/agencies/revenue/incentives-credits-and-programs/tax-credits
Personal Income Tax Guide – Deductions and Credits:
https://www.pa.gov/agencies/revenue/forms-and-publications/pa-personal-income-tax-guide/deductions-and-credits
Working Pennsylvanians Tax Credit Information:
https://www.pa.gov/agencies/revenue/resources/tax-types-and-information/personal-income-tax/working-pennsylvanians-tax-credit
Local Income Tax Information:
https://dced.pa.gov/local-government/local-income-tax-information/
Legislative Updates:
Monitor Pennsylvania General Assembly website for new tax legislation:
https://www.legis.state.pa.us
Tax Residency vs Domicile in Pennsylvania
Understanding the difference between residency and domicile is critical for determining Pennsylvania tax obligations.
Domicile Defined
Domicile is the place where an individual maintains their permanent home and to which they intend to return whenever absent.
Key characteristics:
- You can have only ONE domicile at a time
- Domicile continues until you establish a new domicile elsewhere with intent to remain
- Temporary absences do not change domicile
- Intent to return is critical
Factors establishing domicile in Pennsylvania:
- Primary residence location
- Voter registration
- Driver’s license
- Vehicle registration
- Professional licenses
- Location of spouse and family
- Bank accounts and financial institution locations
- Membership in religious, social, and professional organizations
- Homestead exemption claimed
- Address on insurance policies, deeds, mortgages, leases
- Stated intent in legal documents (wills, trusts)
- Where you file federal and state tax returns as resident
- Where you gather for family and social events
Pennsylvania Statutory Residency
Pennsylvania also applies a statutory residency test based on physical presence.
You are a statutory resident of Pennsylvania if:
You do not maintain a permanent place of abode in Pennsylvania but:
- You maintain a permanent place of abode elsewhere, AND
- You spend more than 183 days of the tax year in Pennsylvania
Permanent place of abode defined:
- A house, apartment, or other building maintained as a dwelling place
- Maintained for an indefinite period of time
- Whether owned or rented
NOT permanent places of abode:
- Barracks, bachelor officer quarters, ship quarters
- Employer-provided temporary housing
- College dormitories
- Fraternity/sorority houses
- Student off-campus rentals
| Critical Differences: Domicile vs Statutory Residency | ||
|---|---|---|
| Factor | Domicile | Statutory Residency |
| Number allowed | One at a time | Can be resident of multiple states |
| Based on | Intent + permanent connections | Physical presence + statutory rules |
| Changes when | Establish new permanent home with intent | Meet state's presence threshold (183 days) |
| Tax impact | Taxed on all income as domiciliary | Taxed on all income as statutory resident |
| Pennsylvania rule | Primary test | Applies if no PA domicile but 183+ days in PA |
Who Is a Pennsylvania Resident for Tax Purposes?
Pennsylvania resident = Either:
- Domiciled in Pennsylvania, OR
- Statutory resident (183+ days in PA with permanent abode elsewhere)
Tax treatment:
- Residents owe Pennsylvania tax on all income from all sources worldwide
- Includes income earned both inside and outside Pennsylvania
- May claim credit for taxes paid to other states on non-Pennsylvania source income
Who Is a Pennsylvania Non-Resident?
Non-resident: Individual who does NOT have domicile or statutory residence in Pennsylvania
Tax treatment:
- Taxed only on Pennsylvania-source income
- Cannot claim credit for taxes paid to other states
Pennsylvania-source income for non-residents:
- Compensation for work performed in Pennsylvania
- Business income from Pennsylvania operations
- Rental income from Pennsylvania property
- Distributive share of income from Pennsylvania partnerships/S corporations
Common Residency Scenarios
Scenario 1: Traditional Pennsylvania Resident
Facts:
- Born and raised in Pennsylvania
- Home, family, and job all in Pennsylvania
- Voter registration and driver’s license in Pennsylvania
Result: Domiciled in Pennsylvania – taxed on all income worldwide
Scenario 2: Snowbird (Winter Resident of Florida)
Facts:
- Domiciled in Pennsylvania (permanent home, family, voting)
- Spends November-March (5 months) in Florida rental
- Total days in Pennsylvania: 214 days
- Total days in Florida: 151 days
Result:
- Remains Pennsylvania resident (domicile unchanged, under 183 days in Florida)
- Pennsylvania taxes all income
- Florida has no income tax (no conflict)
Scenario 3: Extended Work Assignment
Facts:
- Domiciled in Pennsylvania (permanent home, family remain in PA)
- Accepts 10-month work assignment in North Carolina
- Rents apartment in NC
- Spends 245 days in North Carolina
- Maintains Pennsylvania driver’s license and voter registration
Result:
- May become North Carolina statutory resident (183+ days, permanent abode in NC)
- Remains Pennsylvania domiciliary
- Subject to tax as resident in both states (dual residency)
- Must file returns in both states
- Claim credit on Pennsylvania return for NC taxes paid
Scenario 4: Moving to Pennsylvania
Facts:
- Domiciled in New Jersey through June 30, 2025
- Moves to Pennsylvania July 1, 2025
- Establishes Pennsylvania domicile (buys home, registers to vote, gets PA license)
Result:
- Part-year resident of both states
- File Pennsylvania part-year return (income from July 1-December 31)
- File New Jersey part-year return (income from January 1-June 30)
- Prorate any annual income items
Remote Workers and Multi-State Taxation
Pennsylvania’s tax treatment of remote workers follows physical presence sourcing rules and is significantly affected by reciprocal agreements.
Core Principle: Physical Presence Sourcing
For compensation (wages):
- Income is sourced to where work is physically performed
- Employer location is irrelevant
- State where employee lives does determine resident taxation
Scenario 1: Living in Pennsylvania, Working Remotely for Out-of-State Employer
Facts:
- Live in Pennsylvania (domicile)
- Work from Pennsylvania home for California company
- All work performed in Pennsylvania
Result:
- Pay Pennsylvania state tax (3.07%) on all compensation (resident of PA)
- Pay Pennsylvania local EIT on compensation (resident of municipality)
- Do NOT pay California state tax (work not performed in California)
- California employer may still need to register with Pennsylvania for withholding
Scenario 2: Living in Pennsylvania, Working in Reciprocal State
Facts:
- Live in Philadelphia, PA
- Commute to work in Wilmington, DE (non-reciprocal state)
- Work performed in Delaware
Result:
- Pay Pennsylvania state tax (3.07%) on all income (PA resident)
- Pay Philadelphia local EIT on all earned income
- Pay Delaware state tax on Delaware wages (non-reciprocal state)
- Claim credit on PA return for Delaware taxes paid
Note: Delaware is NOT a reciprocal state with Pennsylvania.
Scenario 3: Living in Pennsylvania, Working in Reciprocal State
Facts:
- Live in Pittsburgh, PA
- Commute to work in Cleveland, OH (reciprocal state)
- Work performed in Ohio
Result:
- Pay Pennsylvania state tax (3.07%) on all income (PA resident)
- Pay Pittsburgh local EIT on all earned income
- Do NOT pay Ohio state tax (reciprocal agreement)
- Do NOT pay Cleveland local tax (reciprocal agreement)
Required: File Form REV-419 (Employee’s Nonwithholding Application Certificate) with Ohio employer
Scenario 4: Living Outside Pennsylvania, Working Remotely for Pennsylvania Company
Facts:
- Live in Texas (domicile)
- Work from Texas home for Pennsylvania company
- All work performed in Texas
Result:
- Do NOT pay Pennsylvania state tax (work not performed in PA)
- Do NOT pay Pennsylvania local tax (not working in PA)
- Texas has no state income tax
- Pennsylvania employer should not withhold PA taxes
Scenario 5: Mixed Work Locations (Hybrid)
Facts:
- Live in Pennsylvania
- Work 3 days/week in Pennsylvania office
- Work 2 days/week from home in Pennsylvania
- Occasional travel to company’s New York office (10 days/year)
Result:
- Pay Pennsylvania state tax (3.07%) on all compensation (PA resident)
- Pay Pennsylvania local EIT on all compensation
- Pay New York state tax on compensation for days worked in New York (10 days)
- Claim credit on PA return for NY taxes paid
Allocation method: Allocate compensation based on days worked in each state.
Pennsylvania Does NOT Apply “Convenience of Employer” Rule
Critical distinction: Pennsylvania does NOT use the “convenience of the employer” rule for remote workers.
What this means:
- If you work from home in another state for a Pennsylvania employer
- Work is for your convenience (not employer necessity)
- You still do NOT owe Pennsylvania tax on that income
- Income is sourced to where work is actually performed
Contrast with New York: New York applies convenience rule – working from home in another state for NY employer may still create NY tax obligation.
Pennsylvania’s rule: Physical presence determines sourcing, regardless of employer location or remote work arrangement.
Reciprocal Agreements
Pennsylvania has reciprocal income tax agreements with six states.
Reciprocal States (Tax Year 2025)
- Indiana
- Maryland
- New Jersey
- Ohio
- Virginia
- West Virginia
How Reciprocity Works
Basic principle:
- Residents of reciprocal states working in Pennsylvania pay tax only to their home state
- Pennsylvania residents working in reciprocal states pay tax only to Pennsylvania
What reciprocity covers:
- W-2 compensation subject to employer withholding
- Most wages and salaries
What reciprocity does NOT cover:
- Non-employee compensation
- Self-employment income
- Business income
- Rental income
- Investment income
- Compensation earned while PA resident but received while resident of reciprocal state
Ohio special rule: Does not apply to compensation paid to Ohio-resident shareholder-employees with 20% or greater interest in Pennsylvania S corporation who worked or performed services in Pennsylvania.
Form Required for Reciprocity
Pennsylvania Resident Working in Reciprocal State:
Form REV-419 – Employee’s Nonwithholding Application Certificate
Purpose: Notifies employer in reciprocal state to withhold Pennsylvania tax instead of reciprocal state tax
Employee responsibility: Complete form and provide to employer
Employer responsibility: Withhold PA tax, not reciprocal state tax
Download: https://www.pa.gov/agencies/revenue/forms-and-publications/forms-for-individuals
Reciprocal State Resident Working in Pennsylvania:
Certificate of Non-Residence
Form varies by employee’s home state. Employee must:
- Complete appropriate certificate
- Provide to Pennsylvania employer
- Pennsylvania employer withholds employee’s home state tax, not PA tax
If certificate not provided: Pennsylvania employer must withhold Pennsylvania state and local taxes.
Reciprocity Limitations
Situation 1: Dual Residency of Reciprocal States
Example:
- Domiciled in Pennsylvania
- Also meet statutory residency requirements in Maryland (183+ days)
Result:
- Reciprocal agreement does NOT apply
- Subject to both states’ resident taxation
- NESTOA Agreement applies (different from reciprocity)
- Must file returns in both states
Situation 2: Compensation Earned as PA Resident, Received as Reciprocal State Resident
Example:
- Work in Pennsylvania while Pennsylvania resident in 2024
- Move to New Jersey in 2025
- Receive deferred compensation or bonus in 2025 for 2024 work
Result:
- Reciprocal agreement does NOT apply to this compensation
- Pennsylvania may tax this income (earned while PA resident)
Multi-State Tax Filing
When You Must File Multiple State Returns
Scenario 1: Pennsylvania Resident with Income from Non-Reciprocal State
File:
- Pennsylvania resident return (all income)
- Other state non-resident return (income earned in that state)
Credit mechanism:
- Claim credit on Pennsylvania return for taxes paid to other state
- Use PA Schedule G-L
Scenario 2: Part-Year Resident
File:
- Pennsylvania part-year resident return (income during PA residency)
- Other state part-year resident return (income during other state residency)
Scenario 3: Dual Resident (Pennsylvania + Another State)
File:
- Pennsylvania resident return (all income)
- Other state resident return (all income)
- Claim credit on domicile state return for taxes paid to statutory residence state
This can happen when:
- Domiciled in Pennsylvania
- Meet another state’s statutory residency test (183+ days)
Interstate Tax Risk Indicator
⚠️ High-Risk Combinations for Pennsylvania Residents
Pennsylvania residents working remotely or in multi-state arrangements face elevated compliance complexity with certain states:
States with aggressive audit practices affecting PA residents:
New York
- Applies “convenience of employer” rule
- Working from PA home for NY employer may still create NY tax obligation
- NY treats income as NY-source unless employer requires out-of-state work
- Frequent source of dual taxation disputes
California
- Aggressive residency audits
- Extended presence (even temporary work assignments) can trigger CA residency claim
- Examines intent to return, family location, business ties
Connecticut
- Complex credit system for taxes paid to other states
- “Non-resident portion” calculations can be intricate
- May require detailed allocation
Massachusetts
- Special telecommuter rules
- Temporary COVID-era rules may affect remote workers
- Requirements change periodically – verify current status
Source: Pennsylvania Department of Revenue guidance and IRS Publication 505
Risk Mitigation Strategies
For Pennsylvania residents working in high-risk states:
- Document physical work location
- Keep day-count logs
- Save travel records
- Maintain email/calendar evidence
- File reciprocity forms if applicable
- Use Form REV-419 for reciprocal states
- Keep copies of filed certificates
- Understand employer withholding obligations
- Verify correct state withholding
- Adjust if necessary to avoid under-withholding penalties
- Consider professional assistance
- Multi-state situations are complex
- Small errors can be costly
- Professional preparation often cost-effective
Source: Best practices from Pennsylvania Department of Revenue and multi-state tax professionals
Part-Year Residents
Tax Treatment
Part-year residents file Pennsylvania returns reporting:
- All income earned during period of Pennsylvania residency
- Exclude income earned while resident of another state
Special rules:
- Not subject to PA tax on ordinary interest, dividends, and capital gains earned while non-resident
- Must prorate certain annual items based on residency period
Moving TO Pennsylvania
Example:
- Resident of Virginia January 1 – August 31, 2025
- Move to Pennsylvania September 1, 2025
- Establish Pennsylvania domicile
File:
- Pennsylvania part-year return (September 1 – December 31 income)
- Virginia part-year return (January 1 – August 31 income)
Pennsylvania return:
- Report all income earned September 1 – December 31
- Include all classes of income (compensation, interest, dividends, etc.)
- Mark part-year resident oval on PA-40
Moving FROM Pennsylvania
Example:
- Resident of Pennsylvania January 1 – June 30, 2025
- Move to North Carolina July 1, 2025
- Establish North Carolina domicile
File:
- Pennsylvania part-year return (January 1 – June 30 income)
- North Carolina part-year return (July 1 – December 31 income)
Pennsylvania return:
- Report all income earned January 1 – June 30
- Include all Pennsylvania-source income even if earned after June 30 (e.g., deferred compensation for work performed while PA resident)
Determining Residency Start/End Date
Key date: The date you establish or abandon domicile
Establishing Pennsylvania domicile requires:
- Physical presence in Pennsylvania, AND
- Intent to make Pennsylvania permanent home
Evidence of establishing domicile:
- Purchase or lease home
- Register to vote
- Obtain Pennsylvania driver’s license
- Enroll children in Pennsylvania schools
- Change address on banks, insurance, legal documents
- Join Pennsylvania organizations
- Move household goods
Abandoning Pennsylvania domicile requires:
- Physical departure from Pennsylvania, AND
- Intent to establish new permanent home elsewhere, AND
- Actions consistent with new domicile
Pennsylvania Residency Audits
Common Audit Triggers
Pennsylvania Department of Revenue may audit residency determinations. Common triggers:
For claiming non-residency:
- Maintaining Pennsylvania driver’s license while claiming other state residency
- Owning property in Pennsylvania while filing as non-resident
- Spouse/children remaining in Pennsylvania
- Voting in Pennsylvania elections
- Professional licenses in Pennsylvania
- Bank accounts at Pennsylvania institutions
- Day count near 183-day statutory threshold
- High income combined with non-resident filing
For part-year residents:
- Unclear residency change date
- Income allocation inconsistent with claimed residency period
- Continuing Pennsylvania ties after claimed move
Burden of Proof
In residency disputes:
- Burden typically falls on taxpayer to prove non-residency or domicile elsewhere
- Pennsylvania Department of Revenue may presume Pennsylvania domicile based on prior history
- Taxpayer must produce clear and convincing evidence of domicile change
Documentation commonly requested in audits:
See Part 5 for comprehensive list of audit documentation.
Source: Pennsylvania Department of Revenue audit guidelines
Special Domicile Rules
Foreign Country Domicile
An individual domiciled in Pennsylvania who also maintains a permanent home in a foreign country is considered a non-resident of Pennsylvania if:
- Absent from Pennsylvania for more than 335 complete calendar days of the tax year, AND
- Maintains a permanent place of abode in the foreign country during entire tax year, AND
- Maintains no permanent place of abode in Pennsylvania at any time during the tax year
All three requirements must be met.
Common Filing Situations - Multi-State
“My employer is in another state, so I don’t owe Pennsylvania tax”
Incorrect.
Pennsylvania residents owe Pennsylvania tax on all income regardless of employer location. Employer location does not determine tax obligation.
Correct treatment: Pennsylvania residents working for out-of-state employers (remotely from PA) owe Pennsylvania state and local taxes on all compensation.
“I work remotely full-time, so I don’t owe tax anywhere”
Incorrect.
All income is taxable in at least one jurisdiction. Remote work does not exempt income from taxation.
Correct treatment: Income is taxable to state of residence (domicile) and/or state where work is performed.
Source: General tax law principle
“I’m a part-year resident, so I owe half the tax”
Incorrect.
Part-year residents owe tax only on income earned during Pennsylvania residency period, not a simple 50% reduction.
Correct treatment: Allocate income to residency period. Tax is based on actual income during Pennsylvania residency, not proration of annual tax.
Military Personnel
Pennsylvania provides specific tax treatment for military service members under the Servicemembers Civil Relief Act (SCRA) and state law.
Servicemembers Civil Relief Act (SCRA)
Federal protection for active duty military:
Active duty military members stationed in Pennsylvania due to military orders:
- Do NOT become Pennsylvania residents solely due to military orders
- Pay income tax to their state of legal residence (domicile)
- Not subject to Pennsylvania income tax on military pay
Critical distinction:
- Military orders do not create Pennsylvania domicile
- Service member’s domicile remains their home state unless intentionally changed
- Military pay is exempt from Pennsylvania taxation for non-resident service members
Military Spouses Residency Relief Act (MSRRA)
Protection for spouses of military members:
Military spouses can maintain home state residency and are not taxed by Pennsylvania on compensation earned in Pennsylvania if all of the following apply:
- Spouse is in Pennsylvania solely to be with servicemember
- Servicemember is in Pennsylvania under military orders
- Spouse has same domicile as servicemember (in another state)
Requirements for MSRRA:
- Servicemember must be in Pennsylvania in compliance with military orders
- Spouse must be in Pennsylvania solely to accompany servicemember
- Spouse must have same domicile (legal residence) as servicemember
What this means:
- Military spouse can maintain out-of-state residency
- Pennsylvania employer should withhold home state tax (not Pennsylvania tax)
- Spouse not subject to Pennsylvania state or local income tax
Documentation:
- Spouse must provide documentation to employer
- Copy of military orders
- Statement of domicile
Source: https://www.pa.gov/agencies/revenue/resources/tax-types-and-information/personal-income-tax/military-pay
Reference: Tax Bulletin 2010-01
Active Duty Military Pay – Pennsylvania Residents
Pennsylvania residents serving on active duty:
Military pay is treated differently based on where the service is performed.
Military Pay EXEMPT from Pennsylvania Tax:
Excluded from Pennsylvania taxation:
- Military pay for federal active duty service performed outside Pennsylvania
- Military pay for federal active duty training performed outside Pennsylvania
- Pay for active state duty for emergency (within or outside Pennsylvania pursuant to 35 PA C.S. Ch. 76)
Federal active duty includes:
- Orders under Title 10 U.S. Code
- Orders under Title 32 U.S. Code (National Guard federal active duty)
- Reservist and National Guard active duty training outside Pennsylvania
Weekend drills outside Pennsylvania: Not taxable if on federal active duty orders.
Military Pay TAXABLE by Pennsylvania:
Subject to Pennsylvania taxation:
- Military service performed within Pennsylvania (even if on federal active duty)
- Exception: Active military duty within Pennsylvania for emergency pursuant to 35 PA C.S. Ch. 76 is exempt
- Weekend drill pay for National Guard and Reserves performed in Pennsylvania
- Military pay under Pennsylvania statute authority (not federal)
Weekend drills in Pennsylvania: Taxable as Pennsylvania-source compensation.
Proof Required for Military Pay Exclusion
Pennsylvania residents must provide proof of military service outside Pennsylvania.
Acceptable proof:
- Copy of military orders showing federal active duty outside Pennsylvania
- Authority section of orders directing to federal active duty
When authority is federal statute:
- 32 U.S.C. §§316, 502, 503, 504, or 505
- Pennsylvania presumes federal active duty
When authority is Pennsylvania statute:
- 51 P.S. §508 or §3102
- Military pay is subject to Pennsylvania tax
Filing requirement:
- Pennsylvania residents must file PA-40
- Include W-2 forms
- Include copies of military orders proving out-of-state service
Nonresident Military Personnel
Military personnel domiciled in other states serving in Pennsylvania:
Exempt from Pennsylvania tax on:
- Federal active duty military pay
- Housing allowances (BAH, BAS)
Subject to Pennsylvania tax on:
- Non-military income earned in Pennsylvania
- Civilian employment in Pennsylvania
- Business income from Pennsylvania operations
- Rental income from Pennsylvania property
Example:
- Service member domiciled in Ohio
- Stationed at Fort Indiantown Gap, PA
- Works part-time civilian job off-base in Pennsylvania
Tax treatment:
- Military pay: Not taxable by Pennsylvania
- Part-time civilian job wages: Taxable by Pennsylvania (PA-source income)
Military Retirement Pay
Pennsylvania does NOT tax qualified military retirement pay.
Exempt military retirement distributions:
- Retired or retainer pay under Chapter 71 of Title 10, U.S. Code
- Military pensions meeting Pennsylvania retirement benefit requirements
- State retirement system military pensions
Requirements for exemption:
- Distribution must qualify as “retirement benefit”
- Paid to person retired from service after reaching specific age OR after stated period of employment
Taxable military-related income:
- Distributions subject to federal early withdrawal penalties (not true retirement benefits)
What Military Personnel DO Pay Pennsylvania Tax On
Pennsylvania resident military members owe Pennsylvania tax on:
- Non-military income earned in Pennsylvania:
- Civilian employment
- Self-employment income
- Business income
- Investment income:
- Interest
- Dividends
- Capital gains
- Rental income:
- Pennsylvania rental properties
- Other income:
- Gambling winnings
- Royalties from Pennsylvania sources
Retirees
Pennsylvania provides favorable tax treatment for retirement income.
Social Security Benefits
Pennsylvania does NOT tax Social Security benefits.
Completely exempt:
- Social Security retirement benefits
- Social Security disability benefits
- Social Security survivor benefits
- Supplemental Security Income (SSI)
No income threshold: All Social Security benefits are exempt regardless of income level.
Pension Income
Pennsylvania generally does not tax qualified retirement benefits.
Public Pensions
NOT taxable by Pennsylvania:
- State Employees’ Retirement System (SERS) distributions
- Pennsylvania School Employees’ Retirement System (PSERS) distributions
- Pennsylvania Municipal Retirement System (PMRS) distributions
- U.S. Civil Service Commission Retirement Disability Plan distributions
- Federal government civilian retirement (FERS, CSRS)
- State and local government pensions (when meeting retirement benefit requirements)
Private Pensions
NOT taxable when received as retirement benefits:
- Private employer pension plans
- 401(k) distributions
- 403(b) distributions
- 457 plan distributions
- Defined benefit pension plans
- Defined contribution plan distributions
Requirements:
- Must be from “eligible Pennsylvania retirement plan”
- Paid to persons retired from service after reaching specific age or stated period of employment
- Cannot be subject to federal early withdrawal penalty
Retirement Account Distributions
401(k) and Traditional IRA
NOT taxable by Pennsylvania:
- Normal distributions after retirement age
- Distributions not subject to federal early withdrawal penalty
May be taxable:
- Distributions subject to federal 10% early withdrawal penalty
- These do not meet definition of “retirement benefits”
Roth IRA
NOT taxable by Pennsylvania:
- Qualified Roth IRA distributions
- Non-qualified distributions (already taxed when contributed)
Pennsylvania generally does not tax Roth IRA distributions since they represent return of after-tax contributions or qualified tax-free distributions.
IRA Contributions
NOT deductible for Pennsylvania:
- Traditional IRA contributions
- Roth IRA contributions
- 401(k) employee contributions
- 403(b) contributions
- Other retirement plan contributions
Why: Pennsylvania does not allow deduction for retirement contributions. These are deducted on federal return, but not Pennsylvania.
What Constitutes “Eligible Pennsylvania Retirement Plan”
A plan qualifies if it has these four characteristics:
- Written plan: Reduced to writing and communicated to participants
- Eligibility requirements: Based on separation from service OR combination of old age/infirmity and long-continued service
- Regular payments: Payments made at regularly recurring intervals after separation from service that continue at least until death
- Employer-provided: From employer-established plan (not including IRAs established by employee)
Note: Fact that a plan is qualified for federal tax purposes is not controlling for Pennsylvania. Pennsylvania uses its own retirement plan definition.
Early Withdrawal Penalty
Distributions subject to federal 10% early withdrawal penalty:
May be taxable by Pennsylvania:
- These distributions do not meet Pennsylvania’s definition of “retirement benefits”
- Not exempt from Pennsylvania taxation
Example:
- Age 45, withdraw $20,000 from 401(k)
- Subject to federal 10% penalty ($2,000)
- Pennsylvania may tax this distribution as it’s not a retirement benefit
Safe harbor:
- If no federal early withdrawal penalty applies, distribution generally exempt from Pennsylvania tax
Reporting Retirement Income
Form 1099-R reporting:
Distribution codes matter:
- Pennsylvania examines distribution codes in Box 7 of Form 1099-R
- Certain codes indicate exempt retirement benefits
- Other codes may indicate taxable distributions
Specifically exempt (regardless of distribution code):
- State Employees’ Retirement System (SERS)
- Pennsylvania School Employees’ Retirement System (PSERS)
- Pennsylvania Municipal Employees’ Retirement System (PMRS)
- U.S. Civil Service Commission Retirement Disability Plan
Filing requirement:
- Include all 1099-R forms with Pennsylvania return
- Pennsylvania will determine taxability
| Tax Treatment by Retirement Income Type — Pennsylvania | |
|---|---|
| Income Type | Pennsylvania Treatment |
| Social Security | NOT taxable |
| Military retirement | NOT taxable (if qualified) |
| Federal civil service pension | NOT taxable |
| State/local government pension | NOT taxable (if qualified) |
| Private employer pension | NOT taxable (if qualified) |
| 401(k) distribution (retirement age) | NOT taxable |
| 401(k) distribution (early, with penalty) | May be taxable |
| Traditional IRA distribution (retirement) | NOT taxable |
| Traditional IRA distribution (early, with penalty) | May be taxable |
| Roth IRA distribution | NOT taxable |
| Annuity payments (retirement) | NOT taxable (if from qualified plan) |
| Source: Pennsylvania Department of Revenue guidance | |
Students
College students attending school in Pennsylvania do NOT automatically become residents for tax purposes.
Student Residency Rules
You remain a non-resident if:
- You maintain legal residence (domicile) in another state
- Your presence in Pennsylvania is temporary for educational purposes
- You intend to return to your home state after graduation
- You do not take affirmative steps to establish Pennsylvania domicile
Student Non-Resident Tax Obligations
Non-resident students owe Pennsylvania tax ONLY on Pennsylvania-source income:
Taxable:
- Wages earned from working in Pennsylvania
- Self-employment income from Pennsylvania work
- Business income from Pennsylvania operations
Generally not taxable (for non-residents):
- Scholarships and fellowships for qualified educational expenses
- Financial aid
- Parent support from out of state
- Investment income from out-of-state sources
Note on scholarships/fellowships: Amounts used for non-qualified expenses (room, board, travel) may be taxable. Same treatment as federal.
Establishing Pennsylvania Residency as a Student
Students CAN become Pennsylvania residents if they take affirmative steps to establish domicile:
Actions that establish Pennsylvania domicile:
- Register to vote in Pennsylvania
- Obtain Pennsylvania driver’s license
- Register vehicle in Pennsylvania
- Purchase property in Pennsylvania
- Maintain year-round presence beyond educational purposes
- Accept permanent employment in Pennsylvania after graduation
- State intent to remain in Pennsylvania permanently
College enrollment alone does NOT establish domicile.
Student Living Arrangements
NOT permanent places of abode:
- College dormitories
- Fraternity/sorority houses
- Off-campus student rentals (if temporary for education)
Why this matters:
- Statutory residency requires “permanent place of abode”
- Student housing typically does not qualify
- Student living in Pennsylvania 183+ days does not become statutory resident if housing is not permanent
Exception: Student who rents apartment year-round, maintains presence beyond school year, and takes other steps indicating permanent residence may establish domicile.
Common Student Scenarios
Scenario 1: Out-of-State Student Attending Pennsylvania College
Facts:
- Permanent home in Maryland
- Attend Penn State
- Work part-time job on campus (wages $8,000)
- Receive scholarship covering tuition
- Plan to return to Maryland after graduation
Result:
- Not Pennsylvania resident (temporary presence for education)
- Owe Pennsylvania tax on $8,000 wages (PA-source income)
- Scholarship not taxable (qualified educational expenses)
- File Pennsylvania non-resident return
Scenario 2: Pennsylvania Student Attending Out-of-State College
Facts:
- Permanent home in Pennsylvania
- Attend University of Delaware
- Work part-time job in Delaware (wages $6,000)
- Plan to return to Pennsylvania
Result:
- Remain Pennsylvania resident (temporary absence for education)
- Owe Pennsylvania tax on all income (including Delaware wages)
- Owe Delaware tax on Delaware wages
- Claim credit on Pennsylvania return for Delaware taxes paid
Scenario 3: Student Establishes Pennsylvania Residency
Facts:
- From Ohio, attend University of Pittsburgh
- After graduation, accept job in Pittsburgh
- Rent apartment year-round
- Obtain Pennsylvania driver’s license
- Register to vote in Pennsylvania
- Intend to remain permanently
Result:
- Establish Pennsylvania domicile upon taking permanent job and other actions
- Become Pennsylvania resident for tax purposes
- File Pennsylvania resident return going forward
Graduate Students and Research Assistants
Teaching assistants and research assistants:
Stipends are taxable compensation:
- TA/RA stipends are compensation for services
- Subject to Pennsylvania tax based on residency status
Scholarships vs. Compensation:
- Amounts for tuition, fees, books, supplies: Scholarship (not taxable if qualified)
- Amounts for teaching/research services: Compensation (taxable)
International students:
- May have tax treaty benefits (federal level)
- Pennsylvania generally follows federal treatment
- Consult with international student office
Deceased Taxpayers (Decedents)
Final Return Filing
Executor/administrator responsibilities:
The executor, administrator, or other person responsible for a decedent’s affairs must file a Pennsylvania tax return if the decedent met the filing requirements.
Final return (PA-40):
- Report all income through date of death
- Include income earned but not yet received at death
- File by April 15 following year of death (or October 15 with extension)
Income After Death
Income received after death:
Compensation paid after death:
- Plus any tax refund
- Must be included as assets of decedent’s estate
- Subject to Pennsylvania inheritance tax
- Not reported on decedent’s final income tax return
Estate income:
- Income earned by estate after death is estate income
- Reported on PA-41 (Fiduciary Income Tax Return)
- Not on decedent’s PA-40
Minors
Pennsylvania does not exempt minors from income tax filing requirements.
Minor filing requirements:
- Minors must file if they meet Pennsylvania filing requirements
- Parent/guardian must file return on behalf of minor
- Being claimed as dependent on parent’s federal return does not exempt minor from Pennsylvania filing
Example:
- 16-year-old earns $5,000 from part-time job
- Pennsylvania tax withheld from wages
- Must file Pennsylvania return even if claimed as dependent on parent’s federal return
Estates and Trusts
Fiduciary Income Tax
Pennsylvania taxes estates and trusts separately from beneficiaries.
Form: PA-41 (Fiduciary Income Tax Return)
Tax rate: 3.07% (same flat rate as individuals)
Taxable income:
- Income earned by estate or trust
- Not distributed to beneficiaries during tax year
Income distributed to beneficiaries:
- Taxed to beneficiaries
- Not taxed to estate/trust
- Beneficiaries report on PA-40 (individuals) or PA-41 (if beneficiary is estate/trust)
Grantor Trusts
Pennsylvania does NOT follow federal grantor trust rules.
Federal treatment:
- Grantor trust income treated as income of settlor (grantor)
Pennsylvania treatment:
- Grantor trust income taxed to the trust (not the grantor)
- Creates mismatch with federal treatment
Multi-state complications:
- Other states may follow federal grantor trust rules
- Can create unusual tax situations
- Professional assistance recommended
Forms & Publications
Primary Tax Return Forms
PA-40 – Pennsylvania Personal Income Tax Return
Used by:
- Residents
- Part-year residents
- Non-residents
All three groups use the same PA-40 form – you indicate your residency status by filling in the appropriate oval.
Download: https://www.pa.gov/agencies/revenue/forms-and-publications/forms-for-individuals
Instructions: Comprehensive instruction booklet (PA-40 IN) available with form
Filing options:
- E-file through myPATH (free): https://mypath.pa.gov
- E-file through approved tax software
- Paper filing
PA-41 – Fiduciary Income Tax Return
Used by:
- Estates
- Trusts
Tax rate: 3.07% on undistributed income
Download: https://www.pa.gov/agencies/revenue/forms-and-publications/forms-for-individuals
Common Schedules and Supporting Forms
PA Schedule A – Interest Income
Purpose: Report interest income (Class 2 income)
Required when: You have interest income to report
PA Schedule B – Dividend Income
Purpose: Report dividend income (Class 3 income)
PA Schedule C – Profit or Loss from Business or Profession
Purpose: Report net profits from business (Class 4 income)
PA Schedule D – Net Gains or Income from Disposition of Property
Purpose: Report capital gains (Class 5 income)
PA Schedule E – Rent, Royalty, Patent and Copyright Income
Purpose: Report rental and royalty income (Class 6 income)
PA Schedule F – Profit or Loss from Farming
Purpose: Report farming income (Class 4 income for farmers)
PA Schedule G-L – Credit for Taxes Paid to Other States
Purpose: Claim credit for income taxes paid to other states
Required documentation:
- Copy of other state’s tax return
- W-2 forms showing withholding
PA Schedule NRH – Nonresident or Part-Year Resident Schedule
Purpose: Calculate Pennsylvania taxable income for nonresidents and part-year residents
When required:
- Filing as nonresident
- Filing as part-year resident
PA Schedule O – Other Deductions
Purpose: Report allowed deductions:
- Medical Savings Account (MSA) contributions
- Health Savings Account (HSA) contributions
- IRC Section 529 tuition account contributions
- Student loan interest deduction (up to $2,500)
PA Schedule OC – Other Credits
Purpose: Report tax credits including:
- Working Pennsylvanians Tax Credit (WPTC)
- Child and Dependent Care Enhancement Tax Credit
- Pass-through credits from partnerships/S corporations
Note: Schedule OC was significantly redesigned for Tax Year 2025.
PA Schedule SP – Special Tax Forgiveness
Purpose: Calculate Tax Forgiveness Credit for low-income taxpayers
Must file: Even if you think you qualify for full forgiveness, you must file Schedule SP to claim the credit
PA Schedule T – Gambling and Lottery Winnings
Purpose: Report gambling and lottery winnings (Class 8 income)
PA Schedule UE – Allowable Employee Business Expenses
Purpose: Report unreimbursed employee business expenses deductible from compensation
Requirements:
- Expenses must be ordinary, actual, reasonable, necessary
- Directly related to taxpayer’s occupation or employment
- Not reimbursed by employer
PA Schedule W-2S – Wage Statement Summary
Purpose: Summarize all W-2 wages and Pennsylvania tax withheld
When required: You have W-2 income to report
Withholding Forms
REV-419 – Employee’s Nonwithholding Application Certificate
Purpose: Pennsylvania resident working in reciprocal state notifies employer to withhold Pennsylvania tax instead of reciprocal state tax
Reciprocal states: Indiana, Maryland, New Jersey, Ohio, Virginia, West Virginia
When to use: Pennsylvania resident begins employment in reciprocal state
Download: https://www.pa.gov/agencies/revenue/forms-and-publications/forms-for-individuals
REV-1667 – Annual Withholding Reconciliation Statement
Purpose: Employers reconcile annual Pennsylvania withholding
Filing requirement: Due January 31 following tax year
PA-40 ES – Declaration of Estimated Tax
Purpose: Make estimated tax payments if you have income not subject to withholding
Payment schedule:
- April 15
- June 15
- September 15
- January 15 (following year)
Download: https://www.pa.gov/agencies/revenue/forms-and-publications/forms-for-individuals
Extension Forms
Automatic extension to October 15:
Pennsylvania grants automatic extension to October 15 if you have federal extension. No separate Pennsylvania extension form required.
Requirements:
- Pay any estimated tax owed by April 15
- File return by October 15
Note: Extension to file is NOT extension to pay. Interest and penalties accrue on unpaid tax from April 15.
Where to Submit Paper Returns
Individual Income Tax Returns (PA-40)
With payment:
PA PERSONAL INCOME TAX
PAYMENT ENCLOSED
PO BOX 280405
HARRISBURG PA 17128-0405
Without payment (refund or no balance due):
PA PERSONAL INCOME TAX
PO BOX 280406
HARRISBURG PA 17128-0406
Farmers:
PA PERSONAL INCOME TAX – FARMERS
PO BOX 280409
HARRISBURG PA 17128-0409
Penalties and Interest
Late Filing Penalty
Penalty: 5% of tax due per month (or part of month)
Maximum: 25% of unpaid tax
Calculation: Penalty applies to unpaid tax balance, calculated monthly
Example:
- Tax due: $1,000
- Filed 3 months late
- Penalty: $150 (5% × $1,000 × 3 months)
Source: Pennsylvania Tax Reform Code
Late Payment Penalty
Penalty: 0.5% of unpaid tax per month (or part of month)
Maximum: 25% of unpaid tax
Applies even with extension: If you have extension to file but don’t pay estimated tax by April 15, late payment penalty applies.
Source: Pennsylvania Tax Reform Code
Interest on Unpaid Tax
Interest rate: Varies – set by Pennsylvania Department of Revenue
Current rate: Check Pennsylvania Department of Revenue website for current interest rate
Compounding: Interest compounds (interest charged on interest)
Applies from: April 15 (original due date) even if you have extension
No minimum: Interest applies to all unpaid balances, no de minimis exception
Source: Pennsylvania Department of Revenue
Underpayment of Estimated Tax Penalty
Applies when: You did not pay sufficient estimated tax throughout the year
Safe harbor to avoid penalty – Pay whichever is LESS:
- 90% of current year tax liability, OR
- 100% of prior year tax liability
Quarterly payment schedule:
- April 15: 25% of required annual payment
- June 15: 25% of required annual payment
- September 15: 25% of required annual payment
- January 15: 25% of required annual payment
Exceptions:
- Tax liability under certain threshold (varies by year)
- Adequate withholding from wages
- Income earned unevenly throughout year (annualized income method available)
Penalty Abatement
Reasonable cause:
Pennsylvania may waive penalties (but not interest) if you can show reasonable cause for late filing or payment.
Examples of reasonable cause:
- Death or serious illness
- Natural disaster
- Fire, casualty, or other disturbance
- Inability to obtain records
- Erroneous advice from Pennsylvania Department of Revenue
Not reasonable cause:
- Lack of funds
- Negligence
- Reliance on tax preparer (you are responsible)
How to request:
- Write to Pennsylvania Department of Revenue
- Explain reasonable cause
- Provide documentation
Audit and Documentation
Common Audit Triggers
Pennsylvania Department of Revenue may select returns for audit based on:
High-risk situations:
- Large refund claims
- Claiming non-residency while maintaining Pennsylvania connections
- High income with unusually low tax
- Missing or incomplete schedules
- Math errors or inconsistencies
- Failure to report income shown on information returns (W-2, 1099)
- Part-year resident income allocation issues
- Credit claims without supporting documentation
Source: Pennsylvania Department of Revenue audit guidelines
Documentation Commonly Requested in Residency Audits
Pennsylvania residency audits require extensive documentation. Keep these records:
| Primary Residency Evidence | |
|---|---|
| Document Type | What It Shows |
| Driver's License | State of legal residence |
| Voter Registration | Where you exercise voting rights |
| Vehicle Registration | Where vehicles are domiciled |
| Professional Licenses | State of professional domicile |
| Passport | Address on file |
| Physical Presence Documentation | |
|---|---|
| Document Type | What It Shows |
| Day-Count Logs | Physical location by day |
| Travel Records | Interstate travel patterns |
| Credit Card Statements | Geographic spending patterns |
| Cell Phone Records | Location data from carrier |
| E-ZPass / Toll Records | State line crossings |
| Airline / Hotel Receipts | Out-of-state travel |
| Work Calendars | Where work performed |
| Property and Financial Ties | |
|---|---|
| Document Type | What It Shows |
| Property Ownership | Real estate holdings in each state |
| Homestead Exemption | Primary residence claim |
| Utility Bills | Physical occupancy patterns |
| Mortgage / Lease | Residence location |
| Bank Statements | Financial institution locations |
| Investment Accounts | Stated residence address |
| Social and Family Connections | |
|---|---|
| Document Type | What It Shows |
| Family Location | Where spouse/children reside |
| Medical Records | Where you receive regular care |
| Dental Records | Regular healthcare location |
| Religious Affiliation | Place of worship attendance |
| Club Memberships | Social/recreational ties |
| Gym Memberships | Regular presence location |
| Employment Documentation | |
|---|---|
| Document Type | What It Shows |
| W-2 Forms | Employer location, wages earned |
| Employment Contract | Work location requirements |
| Remote Work Agreement | Authorization to work remotely |
| Company ID Badge | Work location |
| Parking Passes | Where you regularly worked |
| Intent Documentation | |
|---|---|
| Document Type | What It Shows |
| Will/Estate Documents | Stated domicile for estate purposes |
| Prior Tax Returns | Historical residency claims |
| Insurance Policies | Address on file with insurers |
| Living Trust Documents | Domicile stated in legal documents |
| Correspondence | Stated address and residence |
Burden of Proof in Audits
General rule:
- Taxpayer bears burden to prove non-residency
- Pennsylvania may presume residency based on prior filing history
- Clear and convincing evidence required to overcome presumption
What “clear and convincing evidence” means:
- Preponderance of factors showing domicile elsewhere
- Objective evidence, not just statements of intent
- Consistent pattern across multiple documentation types
Source: Pennsylvania Department of Revenue audit procedures
Statute of Limitations
General rule: 3 years from date return filed or due date (whichever is later)
Exceptions:
- Substantial understatement (25%+): Extended to 6 years
- No return filed: No statute of limitations
- Fraud: No statute of limitations
Best practice: Keep tax records for at least 7 years
Official Pennsylvania Resources
Pennsylvania Department of Revenue
Main Website:
https://www.pa.gov/agencies/revenue
Personal Income Tax Information:
https://www.pa.gov/agencies/revenue/resources/tax-types-and-information/personal-income-tax
Forms and Publications:
https://www.pa.gov/agencies/revenue/forms-and-publications/forms-for-individuals
Online Filing Portal (myPATH):
https://mypath.pa.gov
Pennsylvania Personal Income Tax Guide:
https://www.pa.gov/agencies/revenue/forms-and-publications/pa-personal-income-tax-guide
Contact Information
Customer Service Center:
Phone: 717-787-8201
Hours: Monday – Friday, 7:30 AM – 5:00 PM ET
Automated Refund Information:
Phone: 1-888-PATAXES (1-888-728-2937)
Available 24/7
Email:
Use online customer service portal at:
https://www.pa.gov/agencies/revenue
Pennsylvania Department of Revenue District Offices
Pennsylvania Department of Revenue maintains district offices throughout the state.
Find nearest office:
https://www.pa.gov/agencies/revenue
(Click “Contact Us” → “District Offices”)
Services provided:
- In-person assistance
- Form pickup
- Account information
Pennsylvania Tax Code and Regulations
Pennsylvania Consolidated Statutes – Title 72 (Revenue):
https://www.legis.state.pa.us/cfdocs/legis/LI/consCheck.cfm?txtType=HTM&ttl=72
Article III – Personal Income Tax:
72 P.S. §§ 7301-7361
Pennsylvania Code – Title 61 (Revenue):
https://www.pacodeandbulletin.gov/Display/pacode?titleNumber=061
Chapter 101 – Personal Income Tax:
61 Pa. Code Ch. 101
Legislative Updates
Pennsylvania General Assembly:
https://www.legis.state.pa.us
Track tax legislation:
- House Finance Committee
- Senate Finance Committee
- Search bills by keyword: “income tax”
Governor’s Office – Press Releases:
https://www.pa.gov/governor/newsroom
Local Income Tax Resources
Pennsylvania Department of Community & Economic Development (DCED)
Local Income Tax Information:
https://dced.pa.gov/local-government/local-income-tax-information/
Address Search Tool (Find Your Rates):
https://munstats.pa.gov/public/findlocaltax.aspx
EIT/LST Tax Registers:
https://munstats.pa.gov
Act 32 Information:
https://dced.pa.gov/local-government/local-income-tax-information/
Contact:
Governor’s Center for Local Government Services
Phone: 1-888-223-6837
Email: Available through website contact form
Local Tax Collectors
Find your local tax collector:
- Use address search tool: https://munstats.pa.gov/public/findlocaltax.aspx
- Contact your municipality
- Check with employer (should provide information)
Free Tax Assistance
VITA (Volunteer Income Tax Assistance)
Eligibility:
- Generally earn $67,000 or less
- Persons with disabilities
- Limited English-speaking taxpayers
Services:
- Free tax preparation
- Federal and Pennsylvania returns
- Electronic filing
Find locations:
Call IRS: 1-800-829-1040
Or visit: https://irs.treasury.gov/freetaxprep
TCE (Tax Counseling for the Elderly)
Eligibility:
- Age 60 and older
- Any income level
Services:
- Free tax preparation
- Specializes in pensions and retirement issues
Find locations:
Call IRS: 1-800-829-1040
AARP Tax-Aide
Eligibility:
- Age 50 and older (priority to low/moderate income)
- Any income level accepted
Services:
- Free tax preparation
- Specializes in senior tax issues
Find locations:
https://www.aarp.org/money/taxes/aarp_taxaide/
Or call: 1-888-227-7669
Additional Resources
IRS Resources (Federal)
IRS Website:
https://www.irs.gov
Relevant IRS Publications:
- Publication 17 – Your Federal Income Tax (for Individuals)
- Publication 505 – Tax Withholding and Estimated Tax
- Publication 575 – Pension and Annuity Income
Note: Pennsylvania tax law differs significantly from federal. Always verify Pennsylvania-specific treatment.
Tax Professional Organizations
Pennsylvania Society of Tax & Accounting Professionals:
https://www.pstap.org
Pennsylvania Institute of Certified Public Accountants:
https://www.picpa.org
National Association of Enrolled Agents:
https://www.naea.org
Where to Check for Updates
Rate and Bracket Changes
Pennsylvania Department of Revenue – Tax Rates:
https://www.pa.gov/agencies/revenue/resources/tax-rates
Note: Pennsylvania’s 3.07% rate has been stable since 2004. Rate changes are infrequent and require legislation.
Last rate change: 2004 (from 2.8% to 3.07%)
Legislative Changes
Pennsylvania General Assembly:
https://www.legis.state.pa.us
Monitor for:
- Personal Income Tax rate changes
- New tax credits or deductions
- Reciprocity agreement changes
- Filing requirement modifications
Administrative Guidance
Pennsylvania Department of Revenue – News & Bulletins:
https://www.pa.gov/agencies/revenue/newsroom
Types of guidance:
- Tax Bulletins (interpretive guidance)
- Revenue Rulings (official positions)
- Information Notices (procedural updates)
- Press releases (major changes)
Forms Updates
Forms are typically updated annually:
January: New tax year forms released for upcoming filing season
Download current forms:
https://www.pa.gov/agencies/revenue/forms-and-publications/forms-for-individuals
Local Tax Rate Changes
Municipal Statistics Database:
https://munstats.pa.gov
EIT/LST rates updated:
- Officially: December 15 annually (for following year)
- Real-time updates: Throughout year
Rate change deadlines:
- December 1: Deadline for municipalities to report rate changes effective January 1
- If no changes: Deadline January 15
Source: https://dced.pa.gov/local-government/local-income-tax-information/
Tax Glossary
Adjusted Gross Income (AGI):
Federal concept. Total income minus specific adjustments (IRA contributions, student loan interest, etc.). Pennsylvania does not use AGI concept.
Compensation:
Pennsylvania Income Class 1. Wages, salaries, bonuses, commissions, tips, and other pay for services.
Domicile:
Your permanent legal home – the place you intend to return to indefinitely. You can have only one domicile at a time.
Earned Income Tax (EIT):
Local tax on wages and net profits levied by Pennsylvania municipalities and school districts.
Flat Tax:
Pennsylvania’s 3.07% tax rate applies equally to all income levels (no brackets or graduated rates).
Local Services Tax (LST):
Annual flat tax (maximum $52) on individuals employed within a Pennsylvania taxing jurisdiction.
Net Profits:
Pennsylvania Income Class 4. Net income from operation of business, profession, or farm.
Non-Resident:
Individual who does not have domicile or statutory residence in Pennsylvania. Taxed only on Pennsylvania-source income.
Part-Year Resident:
Individual who moved into or out of Pennsylvania during the tax year.
Political Subdivision Code (PSD):
Unique identifier for Pennsylvania municipalities and school districts used for local tax administration.
Reciprocal Agreement:
Agreement between states where residents working across state lines pay tax only to state of residence. Pennsylvania has reciprocal agreements with 6 states.
Resident:
Individual domiciled in Pennsylvania OR statutory resident (183+ days with permanent abode elsewhere).
Statutory Resident:
Individual who spends 183+ days in Pennsylvania with permanent abode elsewhere (but not domiciled in PA).
Tax Credit:
Dollar-for-dollar reduction in tax owed. Example: $500 credit reduces tax by $500.
Tax Deduction:
Reduces taxable income. Example: $500 deduction × 3.07% = $15.35 tax savings.
Tax Forgiveness:
Pennsylvania program reducing or eliminating tax liability for low-income taxpayers.
Update History
February 2026 – Initial Publication
- Published comprehensive Pennsylvania income tax guide for Tax Year 2025
- Documented 3.07% flat tax rate structure
- Detailed local earned income tax system (2,500+ jurisdictions)
- Documented Working Pennsylvanians Tax Credit (new for 2025)
- Explained reciprocal agreements with 6 states
- Covered residency rules and multi-state taxation
- All sections verified from official Pennsylvania Department of Revenue sources
- All URLs verified functional as of February 12, 2026