Pennsylvania State Taxes
What You'll Pay in Taxes If You Live in Pennsylvania
Pennsylvania state taxes extend from the usual income taxes, sales taxes, and real and personal property taxes to an inheritance tax and even an obsolete estate tax. The state throws in a few other little taxes as well, depending on exactly what you purchase there.
Technically, the state of Pennsylvania does not collect real and personal property taxes, but its counties, municipalities, and school districts do. Real property value is determined by the county assessor, and tax bills are calculated using millage rates -- one mill is equal to 1/10 of one cent, or $0.001. You'll pay $1 in tax for every $1,000 of assessed property value at a rate of one mill. Each locality has its own millage rate, but rates cannot exceed 30 mills or $30 per $1,000 of assessed value without special court permission.
Property Tax/Rent Rebate
Pennsylvania's property tax/rent rebate program offers rebates for property taxes already paid either by homeowners or renters who qualify:
- You or your spouse must be 65 years or older to qualify.
- A widow or widower qualifies at age 50 or older.
- Those age 18 and older qualify if they are permanently disabled.
- A qualifying homeowner's annual income cannot exceed $35,000, and this includes half of his Social Security income.
- Renters cannot earn more than $15,000 annually, and the same Social Security rule applies.
Special rules were set in place in 2015 to prevent some homeowners and renters from being disqualified on the basis of income due to Social Security cost-of-living adjustments. You may still qualify if your annual income is as much as $36,663 for homeowners or $15,713 for renters, including half your Social Security income if you previously received a property tax rebate. The state encourages you to apply to find out – the worst that can happen is that your claim will be denied.
The maximum rebate is $650 as of 2016, down to $250 for those with higher incomes. Some homeowners can receive supplemental rebates increasing the total to $975. File Form PA-1000 by June 30.
State Income Taxes
Pennsylvania is one of only a few states with a flat tax system. The state assesses a 3.07% tax rate regardless of how much income you earn. Pennsylvania does not allow taxpayers to deduct personal exemptions. A tax forgiveness credit is available to low-income filers.
Estate and Inheritance Taxes
Although Pennsylvania does have an estate tax on its books, it's no longer enforced. An estate tax would typically be levied on the overall value of a decedent's estate.
The state does impose an inheritance tax on individual bequests made to beneficiaries, payable by the beneficiary. Surviving spouses and surviving parents inheriting from a minor age 21 or younger are exempt. The tax ranges from 4.5 percent on gifts to direct descendants to 12 percent for siblings and 15 percent for all other beneficiaries except some charitable, government and political organizations.
Sales and Other Taxes
Pennsylvania's sales tax is 6 percent. Allegheny County adds a 1 percent local sales tax and Philadelphia adds 2 percent. As of 2015, the state had the highest gas tax in the U.S. at 50.5 cents a gallon. It taxes cigarettes at the rate of $1.60 per pack.