Understanding taxes in Pennsylvania

On Behalf of | Apr 24, 2022 | Tax Issues

Pennsylvania state taxes are unique compared to the tax requirements in many other states. There are a number of taxes for personal income, sales purchases, property ownership, inheritances and many other reasons. There are basic facts to know about this state’s tax regulations.

Income tax requirements

Pennsylvania requires its taxpayers to pay a state income tax of 3.07%. There are additional local taxes that are charged by individual counties and jurisdictions. The earned income tax is charged on individual gross earned income in municipalities and school districts.

Sales taxes

State residents pay 6% sales taxes on everyday items from cigarettes to medical marijuana in addition to property taxes, estate, inheritance taxes and many other taxes. The local tax rates vary and may increase by 1% or 2% in different counties.

Pennsylvania faces tax issues that include having a high number of taxes and charging the highest rates. Since 2021, the state has one of the highest gas taxes in the country at 58.7 cents per gallon.

Tax friendly for retirees

Pennsylvania is tax-friendly to retirees, and it’s one of the few states that does not tax retirement income. There is also no tax on Social Security, IRA or 401(k) incomes compared to in other states.

Understanding your tax requirements

Tax issues are growing concerns as the prices for everyday purchases increase. In some states, the costs of living fluctuate regularly and have become more unpredictable. In a state like Pennsylvania, there are so many taxes that it’s difficult to keep up with the different types. In addition to state taxes, there are local taxes that affect residents who live in different jurisdictions.