Pennsylvania Paycheck Calculator 2026 — 3.07% Flat Tax, EIT, LST & Philadelphia Wage Tax
Pennsylvania’s flat 3.07% state tax is the lowest in the US — plus local EIT (0.312%–3.75%), LST ($10–$156/year), or Philadelphia’s Wage Tax (3.74%/3.43%) depending on your city. Reciprocity with IN, MD, NJ, OH, VA, WV. Calculate your exact 2026 take-home pay instantly — free, no signup.
- 3.07% Flat State Tax
- Local EIT 0.312%-3.75%
- LST $10-$156
- Philly Tax 3.74%/3.43%
- $7.25 Min Wage
- 2026 Tax Brackets
- Free & No Signup
Pennsylvania Paycheck Calculator 2026
Flat 3.07% state tax · Philadelphia wage tax · LST · PA SUI · No standard deduction
✅ Pennsylvania 2026
Pennsylvania: Flat 3.07% state income tax on ALL gross income — no standard deduction, no personal exemptions.
Local EIT, LST ($10/$52/$156/yr), and Philadelphia wage tax (3.74% resident / 3.43% non-resident) apply by city.
PA SUI: 0.07% on first $10,000. Minimum wage $7.25/hr. Overtime 1.5x after 40 hrs.
Reciprocity with Indiana, Maryland, New Jersey, Ohio, Virginia, West Virginia.
📋 Pay Information
⚠️ PA minimum wage is $7.25/hr. Your hourly rate is below the legal minimum.
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🏙️ Select your city to apply correct local taxes.
💡 Based on your income, you likely qualify for the reduced $10/year LST rate for low-wage earners (under $12,000/year). We've applied it automatically — change it below if needed.
⚙️ Advanced Options
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💰 Your Results
Take-Home Pay
$0.00
per paycheck (biweekly)
$0.00 / year estimated
0.0%
Effective Tax Rate
100%
Take-Home %
$0
Gross / Paycheck
Weekly$0
Monthly$0
Annual$0
PAYCHECK BREAKDOWN
Gross PayBefore deductions
100%
$0.00
Federal Income Tax2026 brackets
0%
$0.00
PA State Income TaxFlat 3.07% — no deductions
0%
$0.00
Local EIT / Philadelphia TaxSelect city above
0%
$0.00
LST (Local Services Tax)$52/year standard
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$0.00
PA SUI0.07% on first $10,000
0%
$0.00
Social Security6.2% up to $184,500
0%
$0.00
Medicare1.45% (+0.9% over $200k single)
0%
$0.00
Pre-tax Deductions401k / Health / HSA+FSA
0%
$0.00
Net Take-Home PayPer paycheck
100%
$0.00
🔔 Pennsylvania Facts 2026
📊 Flat 3.07% state tax on ALL gross income — no standard deduction, no exemptions
🏙️ Philadelphia wage tax: 3.74% residents / 3.43% non-residents — most competitors miss this!
💼 LST (Local Services Tax): $10, $52, or $156/year flat — collected by employer
📉 PA SUI: 0.07% on first $10,000 wages (employee contribution)
💰 Minimum wage: $7.25 per hour (federal minimum)
⏱️ Overtime: 1.5x after 40 hours per week
🤝 Reciprocal Agreement Note
If you live in Indiana, Maryland, New Jersey, Ohio, Virginia, or West Virginia and work in Pennsylvania, you pay tax to your HOME state — not Pennsylvania. Ask your employer for a PA exemption certificate.
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Pennsylvania Tax Information — 3.07% Flat Rate, No Standard Deduction
Pennsylvania’s income tax rate for 2026 is a flat 3.07% — the lowest flat tax rate of any US state. This applies to your entire gross income with no standard deduction and no personal exemptions. On top of this, most workers also pay a local Earned Income Tax (EIT) of 0.312%–3.75% and a Local Services Tax (LST) of $10–$156/year, depending on their city. Philadelphia workers pay a Wage Tax instead (3.74% residents / 3.43% non-residents).
Pennsylvania has one of the simplest state income tax systems in the United States. Here is everything you need to know about how Pennsylvania taxes your paycheck.
Flat 3.07% State Income Tax
Pennsylvania charges a flat state income tax rate of 3.07 percent. This is the lowest flat tax rate among all states that have a flat income tax system. Unlike progressive states like California where higher incomes are taxed at higher rates, Pennsylvania charges the same 3.07 percent whether you earn $30,000 or $300,000 per year.
For example, if you earn $50,000 per year, your Pennsylvania state tax is $50,000 times 0.0307 equals $1,535 per year. If you earn $100,000 per year, your Pennsylvania state tax is $100,000 times 0.0307 equals $3,070 per year. If you earn $200,000 per year, your Pennsylvania state tax is $200,000 times 0.0307 equals $6,140 per year.
No Standard Deduction — Important Difference from Federal Tax
Unlike federal taxes where you can deduct $16,100 (single) or $32,200 (married) before calculating your tax, Pennsylvania has no standard deduction. Your entire gross income is subject to the 3.07 percent state tax. There are also no personal exemptions in Pennsylvania.
This means your Pennsylvania taxable income is the same as your gross income. If you earn $60,000 per year, you pay Pennsylvania state tax on the full $60,000. You do not get to subtract anything before calculating your state tax.
No Personal Exemptions
Pennsylvania does not offer personal exemptions for yourself, your spouse, or your dependents. Every dollar you earn is taxed at 3.07 percent regardless of your family size. This is different from many other states where having children reduces your state tax bill.
Local EIT Earned Income Tax — Most Cities
In addition to the state 3.07 percent tax, most Pennsylvania cities charge a local Earned Income Tax or EIT. The EIT rate typically ranges from 0.312 percent to 3.75 percent depending on where you live and work.
The EIT applies to earned income including wages, salaries, bonuses, commissions, and self-employment income. It does not apply to interest, dividends, or retirement income. You pay EIT to the city where you live, not where you work. If your employer is in a different city, your employer may withhold EIT for your home city.
LST Local Services Tax — Fixed Dollar Amount
Many Pennsylvania cities also charge a Local Services Tax or LST. Unlike the EIT which is a percentage of your income, the LST is a fixed dollar amount per year. The amount is typically $10, $52, or $156 per year depending on your city and your income level.
Low-wage workers earning less than $12,000 per year are generally exempt from the LST or pay only the $10 rate. Most workers pay $52 per year. Workers in Philadelphia and some other cities pay $156 per year. Your employer collects this tax by dividing the annual amount by the number of pay periods and deducting a small amount from each paycheck.
Philadelphia Wage Tax — Special Case
Philadelphia does not follow the standard EIT and LST system. Instead, Philadelphia has its own Wage Tax that applies to anyone who works in Philadelphia, whether they live in the city or commute from the suburbs.
Philadelphia residents pay a Wage Tax of 3.74 percent. Non-residents who work in Philadelphia pay a Wage Tax of 3.43 percent. This tax applies to all earned income including wages, salaries, bonuses, and commissions. Unlike the EIT which is based on where you live, the Philadelphia Wage Tax is based on where you work.
Pittsburgh Taxes
Pittsburgh has its own local tax structure. Pittsburgh charges an EIT of approximately 3 percent for residents. Pittsburgh also charges an LST of $52 per year for most workers. Some workers near Pittsburgh may pay different rates depending on their specific municipality.
PA SUI State Unemployment Insurance — Employee Contribution
Pennsylvania is one of only a few states where employees contribute to State Unemployment Insurance. The PA SUI rate for employees is 0.07 percent on the first $10,000 of wages. Once you earn more than $10,000 in a calendar year, the SUI tax stops for the rest of the year.
On a $50,000 salary, you pay PA SUI tax on only the first $10,000. Your annual SUI tax is $10,000 times 0.0007 equals $7 per year. On a $100,000 salary, you also pay only $7 per year because the tax stops at $10,000.
Reciprocal Agreements with Six States
Pennsylvania has reciprocity agreements with Indiana, Maryland, New Jersey, Ohio, Virginia, and West Virginia. If you live in one of these states and work in Pennsylvania, you pay state income tax only to your home state, not to Pennsylvania. If you live in Pennsylvania and work in one of these states, you pay state income tax only to Pennsylvania.
For example, if you live in New Jersey and work in Philadelphia, you pay New Jersey state tax, not Pennsylvania state tax. However, you still pay the Philadelphia Wage Tax of 3.43 percent because that is a local tax, not a state tax.
Minimum Wage and Overtime
The minimum wage in Pennsylvania for 2026 is $7.25 per hour, which follows the federal minimum wage rate. Overtime pay is one and a half times your regular rate for all hours worked over 40 hours per week. For example, if you earn $15 per hour, your overtime rate is $22.50 per hour.
No Tax on Social Security or Retirement Income
Pennsylvania does not tax Social Security benefits. Pennsylvania also does not tax retirement income including 401k withdrawals, IRA withdrawals, pension income, and annuity payments. This makes Pennsylvania attractive for retirees who want to keep more of their retirement savings.
Quick Summary of Pennsylvania Taxes
Here is a quick summary of all taxes that may affect your Pennsylvania paycheck.
State Income Tax: 3.07 percent flat on all gross income. No standard deduction. No personal exemptions. Local EIT: 0.312 percent to 3.75 percent depending on your city. Based on where you live. LST: $10, $52, or $156 per year depending on your city and income level. Fixed dollar amount. Philadelphia Wage Tax: 3.74 percent for residents, 3.43 percent for non-residents. Based on where you work. PA SUI: 0.07 percent on the first $10,000 of wages. Employee paid. Social Security: 6.2 percent on the first $184,500 of wages. Medicare: 1.45 percent on all wages. Additional 0.9 percent for high earners over $200,000. Sales Tax: Pennsylvania has a state sales tax of 6 percent. Local taxes can add up to 2 percent, making the total sales tax up to 8 percent in some areas. Sales tax does not affect your paycheck. Property Tax: Property taxes vary by county and school district. Property tax does not affect your paycheck.
Local EIT Earned Income Tax — Complete Guide by City
In addition to Pennsylvania’s 3.07 percent flat state income tax, most Pennsylvania cities charge a local Earned Income Tax or EIT. Understanding your local EIT rate is essential for calculating your accurate take-home pay.
What is EIT?
EIT stands for Earned Income Tax. It is a local tax on wages, salaries, bonuses, commissions, and self-employment income. EIT does not apply to interest, dividends, capital gains, or retirement income including Social Security, 401k withdrawals, IRA withdrawals, or pension income.
The EIT rate varies by city. Most cities charge between 0.312 percent and 3.75 percent. You pay EIT to the city where you live, not where you work. If you live in one city and work in another, your employer will withhold EIT for your home city.
How EIT is Collected
Your employer is responsible for withholding EIT from your paycheck. They use your home address to determine the correct EIT rate. If you move to a different city, update your address with your employer so they withhold the correct amount.
If your employer does not withhold EIT for your home city, you may need to make quarterly estimated payments directly to your local tax collector. Most cities in Pennsylvania use third-party collectors like Berkheimer, Jordan Tax Service, or Keystone Collections Group.
Pennsylvania EIT & LST Rates by City (2026)
| City | EIT Rate | LST (per year) |
|---|---|---|
| Philadelphia | 3.74% resident / 3.43% non-resident (Wage Tax, not EIT) | $156 |
| Pittsburgh | 3.00% | $52 |
| Harrisburg | 2.00% | $52 |
| Scranton | 3.40% | $52 |
| Reading | 3.60% | $52 |
| Wilkes-Barre | 3.00% | $52 |
| Chester | 2.50% | $52 |
| Allentown | 1.50% | $52 |
| New Castle | 1.50% | $52 |
| Johnstown | 1.50% | $52 |
| Erie | 1.65% | $52 |
| York | 1.25% | $52 |
| Altoona | 1.20% | $52 |
| Lancaster | 1.10% | $52 |
| Williamsport | 1.10% | $52 |
| Bethlehem | 1.00% | $52 |
| Easton | 1.00% | $52 |
| Butler | 1.00% | $52 |
| State College | 0.50% | $52 |
| Chambersburg | 0.50% | $52 |
| Other PA cities (default) | ~1.00% | $52 |
Philadelphia
EIT Rate:
3.74% resident / 3.43% non-resident (Wage Tax, not EIT)
LST (per year):
$156
Pittsburgh
EIT Rate:
3.00%
LST (per year):
$52
Harrisburg
EIT Rate:
2.00%
LST (per year):
$52
Scranton
EIT Rate:
3.40%
LST (per year):
$52
Reading
EIT Rate:
3.60%
LST (per year):
$52
Wilkes-Barre
EIT Rate:
3.00%
LST (per year):
$52
Chester
EIT Rate:
2.50%
LST (per year):
$52
Allentown
EIT Rate:
1.50%
LST (per year):
$52
New Castle
EIT Rate:
1.50%
LST (per year):
$52
Johnstown
EIT Rate:
1.50%
LST (per year):
$52
Erie
EIT Rate:
1.65%
LST (per year):
$52
York
EIT Rate:
1.25%
LST (per year):
$52
Altoona
EIT Rate:
1.20%
LST (per year):
$52
Lancaster
EIT Rate:
1.10%
LST (per year):
$52
Williamsport
EIT Rate:
1.10%
LST (per year):
$52
Bethlehem
EIT Rate:
1.00%
LST (per year):
$52
Easton
EIT Rate:
1.00%
LST (per year):
$52
Butler
EIT Rate:
1.00%
LST (per year):
$52
State College
EIT Rate:
0.50%
LST (per year):
$52
Chambersburg
EIT Rate:
0.50%
LST (per year):
$52
Other PA cities (default)
EIT Rate:
~1.00%
LST (per year):
$52
Low-wage earners under $12,000/year typically pay only $10 LST or are exempt. Check your pay stub or local tax collector for your exact city rate.
Pittsburgh Income Tax Calculator — What Pittsburgh Workers Pay
Pittsburgh charges an EIT of approximately 3.00 percent for residents, plus an LST of $52 per year for most workers. If you live and work in Pittsburgh, your combined local tax burden is approximately 3.00 percent of your income plus $52 per year flat.
For example, on a $60,000 salary in Pittsburgh, your annual EIT is $60,000 times 0.03 equals $1,800 per year, plus $52 LST, for a total local tax of $1,852 per year — about $71 per biweekly paycheck. Use our calculator above and select Pittsburgh as your city to see your exact take-home pay after Pittsburgh’s EIT, LST, Pennsylvania state tax, federal tax, and FICA.
How EIT Affects Your Monthly Take-Home Pay
The EIT rate directly reduces your take-home pay. On a $60,000 salary, a 1 percent EIT costs you $600 per year or $50 per month. A 2 percent EIT costs you $1,200 per year or $100 per month. A 3 percent EIT costs you $1,800 per year or $150 per month.
For example, if you earn $60,000 per year and live in Harrisburg with a 2.00 percent EIT, your annual EIT is $1,200. Your monthly take-home pay is reduced by $100 compared to someone living in a city with no EIT.
EIT vs Philadelphia Wage Tax
Philadelphia is different from all other Pennsylvania cities. Instead of an EIT, Philadelphia charges a Wage Tax. The Philadelphia Wage Tax is 3.74 percent for residents and 3.43 percent for non-residents who work in Philadelphia.
Unlike the EIT which is based on where you live, the Philadelphia Wage Tax is based on where you work. If you live in the suburbs but work in Philadelphia, you pay the non-resident rate of 3.43 percent. Your home city may also charge an EIT, but most suburbs offer a credit for taxes paid to Philadelphia.
If you live in Philadelphia and work in Philadelphia, you pay the resident rate of 3.74 percent. You do not pay any additional EIT because Philadelphia has no EIT.
EIT Exemptions and Special Rules
Some types of income are exempt from EIT. Retirement income including Social Security, 401k withdrawals, IRA withdrawals, and pension income are not subject to EIT. Interest, dividends, and capital gains are also exempt.
Active duty military pay is exempt from EIT for Pennsylvania residents stationed outside Pennsylvania. Some cities offer senior citizen exemptions or low-income exemptions. Check with your local tax collector for details.
If you are a low-wage earner, you may be exempt from the LST but not from the EIT. The LST exemption is typically for workers earning less than $12,000 per year. The EIT applies regardless of income level.
How to Find Your Exact EIT Rate
The best way to find your exact EIT rate is to check your pay stub. Your employer should list the EIT deduction with the rate and the tax collector name. If it is not on your pay stub, ask your payroll department.
You can also search online for your city name plus “earned income tax rate”. Most cities publish their current EIT rates on their official websites. The Pennsylvania Department of Community and Economic Development also maintains a list of local tax rates.
Use our calculator above to include EIT in your take-home pay calculation. Select your city from the dropdown menu or enter your EIT rate manually. The calculator will automatically apply the correct rate to your salary and show your net pay after state tax, EIT, LST, federal tax, and FICA.
Real Example — EIT Impact on $60,000 Salary
Let us compare two workers earning the same $60,000 salary in different Pennsylvania cities.
Worker A lives in a city with no EIT (rare, but some townships have no EIT). Worker A pays $0 in local EIT per year. Worker A’s monthly take-home pay is approximately $3,800 after all taxes.
Worker B lives in Harrisburg with a 2.00 percent EIT. Worker B pays $1,200 per year in EIT. Worker B’s monthly take-home pay is approximately $3,700 after all taxes. The difference is $100 per month simply because of where they live.
Worker C lives in Scranton with a 3.40 percent EIT. Worker C pays $2,040 per year in EIT. Worker C’s monthly take-home pay is approximately $3,630 after all taxes. The difference between Scranton and a no-EIT city is $170 per month.
Choosing where to live in Pennsylvania can save you hundreds or even thousands of dollars per year in local taxes. Make sure you understand your city’s EIT rate before signing a lease or buying a home.
LST Local Services Tax — Complete Guide 10 , 10,52, or $156 per year
The Local Services Tax or LST is a unique Pennsylvania tax that many workers do not know about until they see it on their pay stub. Unlike other taxes that are a percentage of your income, the LST is a fixed dollar amount per year. Understanding the LST helps you know exactly why a small amount is deducted from each paycheck.
What is LST?
LST stands for Local Services Tax. It is a flat dollar tax collected by many Pennsylvania cities, boroughs, and townships. The tax funds police, fire, ambulance, road maintenance, and other local services. Unlike the EIT which is a percentage of your income, the LST is the same dollar amount for most workers in a given city.
The LST amount depends on where you live or work. Most cities charge $52 per year. Some cities charge $156 per year. Low-wage workers earning less than $12,000 per year pay only $10 per year or are completely exempt.
How Much is the LST?
The LST has three tiers based on your annual income and your city.
The $10 tier applies to low-wage earners. If you earn less than $12,000 per year, you pay only $10 per year. Some cities exempt low-wage earners entirely, meaning you pay $0. If you are a part-time worker, student, or retiree with low earned income, you should pay the $10 rate.
The $52 tier applies to most workers. If you earn between $12,000 and $100,000 per year in most cities, you pay $52 per year. This is the standard rate for the majority of Pennsylvania workers, including Pittsburgh, Harrisburg, Allentown, Erie, Scranton, Reading, Bethlehem, Lancaster, and York.
The $156 tier applies to workers in Philadelphia and some other high-cost cities. If you work in Philadelphia, you pay $156 per year regardless of your income level. This is the highest LST rate in Pennsylvania.
For the exact LST and EIT rate in your specific city, see the full rate table in the Local EIT section above.
How is LST Deducted from Your Paycheck?
Your employer divides the annual LST amount by the number of pay periods in a year and deducts that amount from each paycheck.
If you are paid weekly and pay $52 per year, your employer deducts $1 per week. If you are paid biweekly, your employer deducts $2 per paycheck. If you are paid monthly, your employer deducts approximately $4.33 per month.
If you are paid weekly and pay $156 per year in Philadelphia, your employer deducts $3 per week. If you are paid biweekly, your employer deducts $6 per paycheck. If you are paid monthly, your employer deducts approximately $13 per month.
If you are a low-wage earner paying $10 per year, your employer deducts approximately $0.19 per week or $0.38 per biweekly paycheck.
Who Pays the LST?
You pay LST to the city where you work, not where you live. If you live in the suburbs but work in Philadelphia, you pay the Philadelphia LST of $156 per year. Your home city may also have an LST, but you only pay LST to your work location.
If you work from home, you pay LST to the city where your home office is located. If your employer is based in a different city but you work from home, pay attention to which city your employer uses for LST withholding. Some employers withhold LST based on their office location, not your home location. Check your pay stub to confirm.
If you have multiple jobs in different cities, you may pay LST to multiple cities. However, you can request a refund from the secondary city if you pay more than the maximum allowed. The maximum LST you can pay in a year is $156 regardless of how many jobs you have.
LST Exemptions
Low-wage earners are exempt from the full LST amount. If you earn less than $12,000 per year, you should pay only $10 per year or $0 depending on your city. Some employers automatically apply this exemption. If your employer does not, you can file for an exemption with your local tax collector.
Active duty military members are exempt from LST. If you are on active duty military service, you do not pay LST regardless of your income. Provide your employer with proof of active duty status.
Some cities offer additional exemptions for senior citizens, disabled workers, or veterans. Check with your local tax collector for details.
How LST Affects Your Monthly Take-Home Pay
The LST is a small tax, but it still affects your take-home pay. On a $52 per year LST, you pay approximately $1 per week or $2 per biweekly paycheck or $4.33 per month. On a $156 per year LST in Philadelphia, you pay approximately $3 per week or $6 per biweekly paycheck or $13 per month.
While these amounts seem small, they add up over time. In a year, you pay $52 or $156 that you could have kept in your pocket. Understanding the LST helps you plan your budget accurately.
Real Example — LST Impact on Different Pay Frequencies
Let us see how the LST deduction appears on your pay stub based on your pay frequency.
If you earn $60,000 per year, live in Harrisburg (LST $52), and are paid biweekly (26 paychecks per year), you will see approximately $2 deducted from each paycheck for LST. The amount may be listed as LST, Local Services Tax, or Occupational Tax on your pay stub.
If you earn $60,000 per year, work in Philadelphia (LST $156), and are paid weekly (52 paychecks per year), you will see approximately $3 deducted from each paycheck for LST.
If you earn $10,000 per year (part-time), you qualify for the low-wage exemption. You should pay only $10 per year or $0. Your employer should deduct approximately $0.38 per biweekly paycheck or nothing at all.
What If Your Employer Withholds the Wrong LST Amount
Employers sometimes withhold the wrong LST amount. Common mistakes include withholding the $52 rate for low-wage earners who should pay $10, withholding the $156 rate for workers outside Philadelphia, or withholding LST from workers who are exempt (active duty military).
If your employer withholds the wrong amount, first ask your payroll department to correct future deductions. They can adjust your withholding by updating your LST status in their payroll system.
If you overpaid LST in a previous year, you can file for a refund with your local tax collector. You will need to provide pay stubs showing the overpayment and proof of your income or exemption status.
LST vs EIT — What is the Difference?
Many workers confuse LST with EIT. Here is the difference.
EIT or Earned Income Tax is a percentage of your income. Most cities charge between 0.312 percent and 3.75 percent. If you earn $60,000 in a city with a 1 percent EIT, you pay $600 per year in EIT.
LST or Local Services Tax is a fixed dollar amount. Most cities charge $52 per year regardless of your income (except low-wage earners). If you earn $60,000 in a city with $52 LST, you pay $52 per year regardless of your income.
The EIT is usually much larger than the LST. On a $60,000 salary with a 1 percent EIT, you pay $600 per year in EIT plus $52 per year in LST for a total of $652 per year in local taxes. On the same salary with a 2 percent EIT, you pay $1,200 per year in EIT plus $52 per year in LST for a total of $1,252 per year in local taxes.
How to Find Your LST Rate
The best way to find your LST rate is to check your pay stub. Your employer should list the LST deduction with the amount. If it is not on your pay stub, ask your payroll department.
You can also search online for your city name plus “Local Services Tax rate”. Most cities publish their current LST rates on their official websites. The Pennsylvania Department of Community and Economic Development also maintains a list of local tax rates.
Use Our Calculator to Include LST in Your Take-Home Pay
Our calculator above includes LST for all major Pennsylvania cities. Select your city from the dropdown menu. If you work in Philadelphia, select Philadelphia to apply the $156 LST rate. If you work in any other major city, the calculator will apply the $52 LST rate. If you are a low-wage earner, select the low-wage option to apply the $10 LST rate.
Philadelphia Wage Tax — Complete Guide 3.74% Residents, 3.43% Non-Residents
The Philadelphia income tax rate (called the Wage Tax) for 2026 is 3.74% for residents and 3.43% for non-residents who work in Philadelphia. This local tax replaces the standard EIT and LST system used by other Pennsylvania cities and applies on top of Pennsylvania’s 3.07% flat state tax and federal income tax.
Philadelphia is unique among Pennsylvania cities. Instead of the standard EIT (Earned Income Tax) and LST (Local Services Tax) system used by most of the state, Philadelphia has its own Wage Tax. If you live or work in Philadelphia, you need to understand how this tax affects your paycheck.
What is the Philadelphia Wage Tax?
The Philadelphia Wage Tax is a local income tax on earned income for anyone who works in the city of Philadelphia. Unlike the EIT which is based on where you live, the Philadelphia Wage Tax is based on where you work. If you work in Philadelphia, you pay this tax regardless of where you live.
The tax applies to all earned income including wages, salaries, bonuses, commissions, tips, and self-employment income earned within Philadelphia. It does not apply to interest, dividends, capital gains, or retirement income including Social Security, 401k withdrawals, IRA withdrawals, or pension income.
Philadelphia Residents vs Non-Residents — Different Rates
Philadelphia has two different Wage Tax rates depending on whether you live in Philadelphia or commute from the suburbs.
Philadelphia residents pay a Wage Tax of 3.74 percent. This applies to all earned income regardless of where you work. If you live in Philadelphia but work in the suburbs, you still pay the Philadelphia resident rate because you live in the city.
Philadelphia non-residents pay a Wage Tax of 3.43 percent. This applies to anyone who does not live in Philadelphia but works in the city. If you live in Cherry Hill, New Jersey or the Pennsylvania suburbs like Ardmore, Bala Cynwyd, or King of Prussia and work in Philadelphia, you pay the non-resident rate of 3.43 percent.
The difference between the resident and non-resident rate is 0.31 percent. On a $60,000 salary, a resident pays approximately $2,244 per year while a non-resident pays approximately $2,058 per year. The resident pays about $186 more per year than the non-resident.
Why Does Philadelphia Have a Wage Tax Instead of EIT?
Philadelphia created the Wage Tax many years ago as a way to fund city services including police, fire, schools, and public transportation. Unlike other Pennsylvania cities that use a combination of EIT and LST, Philadelphia consolidated all local taxes into a single Wage Tax.
The advantage of the Wage Tax is simplicity. You pay one local tax rate instead of separate EIT and LST calculations. The disadvantage is that the rate is higher than most other Pennsylvania cities. Most Pennsylvania cities have combined local taxes (EIT plus LST) between 1.5 percent and 3.5 percent, while Philadelphia’s rate is 3.74 percent for residents and 3.43 percent for non-residents.
Who Pays the Philadelphia Wage Tax?
You pay the Philadelphia Wage Tax if you meet one of two conditions.
First, if you work in Philadelphia, you pay the Wage Tax. Your employer is required to withhold the tax regardless of where you live. Even if you live in New Jersey, Delaware, or the Pennsylvania suburbs, you pay the non-resident rate of 3.43 percent on the wages you earn while working in Philadelphia.
Second, if you live in Philadelphia, you pay the resident rate of 3.74 percent on all your earned income, even if you work outside the city. If you live in Philadelphia but work in King of Prussia or Cherry Hill, your employer should still withhold the Philadelphia resident rate.
If you both live and work in Philadelphia, you pay the resident rate of 3.74 percent on your entire income. You do not pay any additional local taxes because the Wage Tax replaces EIT and LST in Philadelphia.
How the Philadelphia Wage Tax is Deducted from Your Paycheck
Your employer is responsible for withholding the Philadelphia Wage Tax from your paycheck. The amount deducted depends on your pay frequency and your residency status.
If you are a Philadelphia resident earning $60,000 per year and paid biweekly, your annual Wage Tax is $60,000 times 0.0374 equals $2,244 per year. Divided by 26 paychecks, approximately $86.31 is deducted from each paycheck for the Wage Tax.
If you are a non-resident earning $60,000 per year working in Philadelphia and paid biweekly, your annual Wage Tax is $60,000 times 0.0343 equals $2,058 per year. Divided by 26 paychecks, approximately $79.15 is deducted from each paycheck for the Wage Tax.
If you are paid weekly, the deduction is approximately $43.15 per week for residents or $39.58 per week for non-residents on a $60,000 salary.
Philadelphia Wage Tax vs EIT — What is the Difference?
Many workers moving to Philadelphia from other parts of Pennsylvania ask about the difference between Wage Tax and EIT.
EIT or Earned Income Tax is a percentage of your income that most Pennsylvania cities charge. The EIT rate typically ranges from 0.312 percent to 3.75 percent. EIT is based on where you live, not where you work. You also pay LST (Local Services Tax) as a fixed dollar amount on top of EIT.
The Philadelphia Wage Tax replaces both EIT and LST. You pay one tax at one rate. There is no separate LST in Philadelphia. The Wage Tax rate for residents is 3.74 percent, which is slightly higher than the combined EIT plus LST in most other Pennsylvania cities.
For example, in Harrisburg, the combined local taxes are about 2.00 percent EIT plus $52 per year LST. On a $60,000 salary, that is about $1,200 plus $52 equals $1,252 per year. In Philadelphia, a resident pays 3.74 percent on $60,000 which is $2,244 per year. Philadelphia’s local tax burden is about $992 higher per year than Harrisburg on the same $60,000 salary.
Philadelphia Wage Tax and LST
Philadelphia does not have a separate LST (Local Services Tax). The Wage Tax includes funding for local services that other cities pay for with the LST. If you work in Philadelphia, you will not see a separate LST deduction on your pay stub. The Wage Tax is the only local tax deducted.
This is different from other Pennsylvania cities where you may see both an EIT deduction and an LST deduction on your pay stub. In Philadelphia, you see only the Wage Tax deduction.
Does the Philadelphia Wage Tax Apply to Remote Workers?
If you work from home in the suburbs but your employer is based in Philadelphia, the answer depends on where you physically perform your work. If you work from your home office in the suburbs and never go into Philadelphia, you do not pay the Philadelphia Wage Tax. Your employer should withhold tax for your home location instead.
If you work from home in the suburbs but occasionally go into the Philadelphia office, you pay the Wage Tax only on the days you actually work in Philadelphia. Some employers calculate this by tracking your in-office days. Other employers simply withhold the full Wage Tax regardless. Check with your payroll department.
If you live in Philadelphia but work from home in Philadelphia, you pay the full resident Wage Tax of 3.74 percent on all your income regardless of where your employer is located.
Real Example — Resident vs Non-Resident on $100,000 Salary
Let us compare two workers earning the same $100,000 salary. Both work in Philadelphia.
Worker A lives in Philadelphia (resident). Worker A pays the resident Wage Tax of 3.74 percent. Annual Wage Tax is $100,000 times 0.0374 equals $3,740 per year. Per biweekly paycheck, approximately $143.85 is deducted for Wage Tax.
Worker B lives in the suburbs (non-resident). Worker B pays the non-resident Wage Tax of 3.43 percent. Annual Wage Tax is $100,000 times 0.0343 equals $3,430 per year. Per biweekly paycheck, approximately $131.92 is deducted for Wage Tax.
Worker A pays $310 more per year in Wage Tax simply because they live in Philadelphia instead of the suburbs. On a monthly basis, Worker A pays about $26 more per month.
Real Example — Living in Philadelphia but Working Outside the City
Let us say you live in Philadelphia but work in King of Prussia. You still pay the Philadelphia resident Wage Tax of 3.74 percent on all your income. Your employer in King of Prussia should withhold the Philadelphia Wage Tax. If they do not, you may need to make estimated payments directly to the Philadelphia Department of Revenue.
Real Example — Living in New Jersey but Working in Philadelphia
Let us say you live in Cherry Hill, New Jersey but work in Philadelphia. You pay the Philadelphia non-resident Wage Tax of 3.43 percent on your wages earned in Philadelphia. You also pay New Jersey state income tax. New Jersey will give you a credit for the taxes paid to Philadelphia, so you do not pay double tax.
Philadelphia Wage Tax Refunds and Credits
If you overpaid the Philadelphia Wage Tax, you can file for a refund with the Philadelphia Department of Revenue. Common reasons for overpayment include working part of the year in Philadelphia and part outside the city, or your employer withholding the resident rate when you are actually a non-resident.
If you live in Philadelphia but your employer withheld the non-resident rate, you owe additional tax. You should file a return and pay the difference. If you live in the suburbs but your employer withheld the resident rate, you are due a refund.
If you pay Wage Tax to Philadelphia and also pay local tax to your home city in the suburbs, you may be eligible for a credit from your home city. Many suburbs offer a credit for taxes paid to Philadelphia. Check with your home city tax collector.
How to Calculate Your Philadelphia Wage Tax
The formula is simple. Multiply your gross earned income by your applicable rate. If you are a resident, multiply by 0.0374. If you are a non-resident, multiply by 0.0343.
For example, if you are a resident earning $60,000 per year, your Wage Tax is $60,000 times 0.0374 equals $2,244 per year.
If you are paid biweekly, divide your annual Wage Tax by 26. For a resident earning $60,000, $2,244 divided by 26 equals approximately $86.31 per paycheck.
If you are paid weekly, divide by 52. For a resident earning $60,000, $2,244 divided by 52 equals approximately $43.15 per week.
If you are paid monthly, divide by 12. For a resident earning $60,000, $2,244 divided by 12 equals approximately $187 per month.
Philadelphia Wage Tax Rates by Year
The Philadelphia Wage Tax rate has decreased gradually over the years. The resident rate was 3.8712 percent in 2021. It decreased to 3.8398 percent in 2022. It decreased to 3.79 percent in 2023. It decreased to 3.75 percent in 2024. For 2026, the rate is 3.74 percent for residents and 3.43 percent for non-residents.
The rates are expected to continue decreasing slowly over time as Philadelphia’s financial situation improves. Check the Philadelphia Department of Revenue website for the most current rates.
Philadelphia Taxes Calculator — How to Use It
Our Philadelphia taxes calculator above lets you calculate your exact take-home pay after the Wage Tax, Pennsylvania state tax, federal tax, Social Security, and Medicare. Here’s how to use this Philadelphia salary tax calculator:
Enter your salary or hourly rate in the Pay Information section. Select “Philadelphia” as your work city. Choose whether you are a resident (3.74%) or non-resident (3.43%). The calculator automatically applies the correct Wage Tax rate along with the $156 Philadelphia LST, Pennsylvania’s 3.07% state tax, PA SUI, federal tax, Social Security, and Medicare. You will see your exact net take-home pay update instantly as you adjust your salary, pay frequency, or residency status.
Pennsylvania Reciprocity Agreements — Complete Guide IN, MD, NJ, OH, VA, WV
Pennsylvania shares tax reciprocity agreements with six neighboring states. These agreements protect cross-border workers from paying double state income tax and simplify how payroll withholding is handled.
What is a Reciprocity Agreement?
A reciprocity agreement is a mutual arrangement between two states. It allows residents of one state to work in a neighboring state without paying income tax to the state where they work.
How it benefits you: You only owe state income tax to your home state. Your employer will withhold your home state’s taxes directly from your paycheck.
The alternative: Without an agreement, you would have to file tax returns in both states, pay the work state first, and then request a tax credit from your home state—a process that is often complex and delays refunds for months.
Which States Have Reciprocity with Pennsylvania?
Pennsylvania maintains active reciprocity agreements with six neighboring states:
| Work State | Home State | Tax Treatment |
|---|---|---|
| Indiana | Pennsylvania | Pay PA tax only; no Indiana return required. |
| Maryland | Pennsylvania | Pay PA tax only; no Maryland return required. |
| New Jersey | Pennsylvania | Pay PA tax only; no New Jersey return required. |
| Ohio | Pennsylvania | Pay PA tax only; no Ohio return required. |
| Virginia | Pennsylvania | Pay PA tax only; no Virginia return required. |
| West Virginia | Pennsylvania | Pay PA tax only; no West Virginia return required. |
Work State: Indiana
Home State
Pennsylvania
Tax Treatment
Pay PA tax only; no Indiana return required.
Work State: Maryland
Home State
Pennsylvania
Tax Treatment
Pay PA tax only; no Maryland return required.
Work State: New Jersey
Home State
Pennsylvania
Tax Treatment
Pay PA tax only; no New Jersey return required.
Work State: Ohio
Home State
Pennsylvania
Tax Treatment
Pay PA tax only; no Ohio return required.
Work State: Virginia
Home State
Pennsylvania
Tax Treatment
Pay PA tax only; no Virginia return required.
Work State: West Virginia
Home State
Pennsylvania
Tax Treatment
Pay PA tax only; no West Virginia return required.
Note: This rule works both ways. If you live in any of these six states and commute to work in Pennsylvania, you only pay income tax to your home state.
Local Taxes: Reciprocity Does NOT Apply
Important: Reciprocity agreements apply only to state-level income taxes. They do not cover local wage taxes, such as Philadelphia’s Earned Income Tax (EIT) or Local Services Tax (LST).
Living in New Jersey, Working in Philadelphia: You are legally required to pay the 3.43% Philadelphia non-resident Wage Tax. Your employer must withhold this tax. You will still file a New Jersey state return, but New Jersey will grant you a tax credit for the local taxes paid to Philadelphia to avoid double taxation.
Living in Pennsylvania, Working in New Jersey: You will not owe New Jersey state tax. However, if your specific work location in New Jersey levies a municipal or local tax, you may still be responsible for it. Check directly with your employer’s payroll department.
What If a State Lacks Reciprocity?
If you live in a state without a reciprocity pact with Pennsylvania (such as New York, Delaware, or Connecticut), standard non-resident tax rules apply:
You pay income tax to the state where the work is physically performed.
You file a resident return in your home state and claim a credit for the taxes paid to the work state.
You must file tax returns in both states every year.
Real-World Case Studies
1. Living in New Jersey, Working in Pennsylvania (Reciprocity + Local Tax)
Worker: Maria (Resides in Cherry Hill, NJ; works in Philadelphia, PA).
State Income Tax: Pays New Jersey state tax only. Her Philadelphia employer withholds NJ state tax; she does not file a PA state return.
Local Tax: Pays the 3.43% Philadelphia non-resident Wage Tax via payroll withholding. NJ grants her a credit for this amount.
Standard Deductions: Federal income tax, Social Security, and Medicare are withheld normally.
2. Living in Pennsylvania, Working in New Jersey (Reciprocity Only)
Worker: Kevin (Resides in Bucks County, PA; works in Trenton, NJ).
State Income Tax: Pays Pennsylvania’s flat state tax rate of 3.07%. His Trenton employer withholds PA tax directly.
Local Tax: None. New Jersey does not levy local municipal income taxes in this jurisdiction.
Payroll Note: Kevin’s NJ employer must register with the Pennsylvania Department of Revenue to remit his PA withholdings correctly.
3. Living in Pennsylvania, Working in Delaware (No Reciprocity)
Worker: Sarah (Resides in Chester County, PA; works in Wilmington, DE).
Tax Treatment: Sarah’s employer withholds Delaware state tax. Sarah files a DE non-resident return and a PA resident return.
Final Tax Burden: She effectively pays the higher of the two state tax rates. If Delaware’s rate is higher, the PA credit covers her PA liability. If PA’s rate is higher, she pays the difference to PA.
Common Reciprocity Mistakes to Avoid
Assuming all neighboring states participate: Pennsylvania does not have reciprocity with New York or Delaware.
Confusing state and local rules: Reciprocity never exempts you from local obligations like the Philadelphia Wage Tax.
Failing to notify payroll: If you do not submit the correct exemption paperwork immediately upon hire, your employer will default to withholding taxes for the work state.
Applying reciprocity to non-wage income: These rules apply strictly to earned income (wages, salaries, commissions). Business profits, rental income, and lottery winnings do not qualify for reciprocity exemptions.
Action Plan: Setting Up Withholding & Requesting Refunds
If you qualify for cross-border tax relief, follow these steps to manage your payroll setup or correct an error:
Real Example — $100,000 Salary in Pennsylvania with Noah
On a $60,000 salary in Pennsylvania, paid biweekly (26 paychecks/year), your gross pay is $2,307.69 per paycheck. After federal tax (~$220), Pennsylvania’s 3.07% state tax (~$70.85), local EIT (varies by city, e.g. ~$46 at 2% in Harrisburg), LST (~$2), Social Security (~$143), and Medicare (~$33), your net take-home pay is approximately $1,790–$1,850 per biweekly paycheck, depending on your city’s local EIT rate. Use the calculator above and select your city for your exact number.
Case Study: Meet Noah
Location: Lives and works in Harrisburg, Pennsylvania
Gross Income: $100,000 per year
Filing Status: Single, no dependents
Retirement Savings: Contributes 5% to a traditional 401(k)
Insurance: Pays $150 per paycheck for health insurance
Local Taxes: Harrisburg EIT (2.00%) and LST ($52 per year)
Step-by-Step Paycheck Breakdown
Summary — Where Did Noah’s Money Go?
Out of Noah’s $3,846 gross pay per biweekly paycheck, the funds are distributed as follows:
- 401(k) Retirement Account (5%): $192
- Health Insurance Premium: $150
- Federal Income Tax: $431
- Pennsylvania State Tax (3.07%): $118
- Harrisburg EIT (2.00%): $77
- Harrisburg LST ($52/year): $2
- PA SUI (0.07%): $0.27
- Social Security (6.2%): $238
- Medicare (1.45%): $56
- Net Take-Home Pay: $2,581
Takeaway: Noah keeps approximately 67 percent of his gross pay. The other 33 percent goes to federal taxes, state taxes, local taxes, retirement, health insurance, and other deductions.
Alternative Scenarios & What-Ifs
What If Noah Lived in Philadelphia Instead?
If Noah lived and worked in Philadelphia instead of Harrisburg, his taxes would be different. Philadelphia has no EIT. Instead, Philadelphia has a Wage Tax of 3.74 percent for residents.
Philadelphia Wage Tax: $100,000 × 0.0374 = $3,740 per year or about $143.85 per biweekly paycheck.
Philadelphia LST: $156 per year, which is about $6 per biweekly paycheck.
Net Take-Home Pay: Approximately $2,450 per biweekly paycheck (about $114 less per paycheck than Harrisburg due to the higher Wage Tax and higher LST).
What If Noah Lived in a Suburb with 1% EIT?
If Noah lived in a Pennsylvania suburb with a 1.00 percent EIT and $52 LST instead of Harrisburg’s 2.00 percent EIT, his net take-home pay would increase.
EIT Adjustment: $100,000 × 0.01 = $1,000 per year or $38.46 per paycheck instead of $76.92.
Net Take-Home Pay: Approximately $2,602 per biweekly paycheck (about $38 more per paycheck than Harrisburg).
Note: Choosing where to live in Pennsylvania can save you hundreds or even thousands of dollars per year in local taxes. A 1 percent difference in EIT on a $100,000 salary is $1,000 per year or $38 per paycheck.
What If Noah Increased His 401k to 10 Percent?
If Noah increased his 401k contribution from 5 percent to 10 percent, his 401k deduction would increase from $192 to $384 per paycheck.
Impact: His taxable income would decrease, so his federal tax would drop by about $40 per paycheck. His Pennsylvania state tax would remain the same because state tax is calculated on gross pay, which would still be $100,000. State tax does not change with 401k contributions in Pennsylvania because the state has no deduction for 401k contributions.
Net Pay: His net pay would decrease by about $150 per paycheck while saving an additional $192 for retirement.
What If Noah Was Married Filing Jointly?
If Noah was married and filing jointly with the same $100,000 household income, his federal tax would drop from $11,211.96 per year to approximately $7,500 per year.
Impact: His Pennsylvania state tax would remain the same because Pennsylvania’s flat tax does not change with filing status. His local EIT would remain the same.
Net Pay: His net pay would increase by about $160 per paycheck.
What If Noah Had Two Children?
If Noah had two children under 17, he would receive a $2,000 child tax credit per child, totaling $4,000. This credit directly reduces his federal tax bill.
Impact: His federal tax would drop from $11,211.96 to approximately $7,655 per year.
Net Pay: His net pay would increase by about $154 per paycheck. His Pennsylvania state tax and local EIT would not change because Pennsylvania does not offer child-related deductions or credits.
Why Understanding Pennsylvania’s Unique Taxes Matters
Pennsylvania has a unique tax system compared to other states. The flat 3.07 percent state tax is simple, but the local taxes are complex. Most workers pay local EIT between 0.5 percent and 3.75 percent plus LST between $52 and $156 per year. Philadelphia workers pay the Wage Tax instead of EIT.
On a $100,000 salary, the difference between living in a no-EIT area and a 3.75 percent EIT area is $3,750 per year or $144 per paycheck. Choosing where to live matters.
Our calculator above includes all Pennsylvania taxes. Enter your salary, select your city, and see your exact take-home pay. The calculator includes state tax (3.07 percent), local EIT, LST, Philadelphia Wage Tax if applicable, PA SUI (0.07 percent), federal tax, Social Security, and Medicare.
Pennsylvania vs Other States — How Your Location Affects Your Paycheck
| State / Location | Tax Type / Rates | Approx. Monthly Take-Home |
|---|---|---|
| No-Tax States (TX, FL, WA, etc.) | 0% State Tax | $4,130 |
| Pennsylvania (Harrisburg) | 3.07% State + 2.00% Local | $3,850 |
| Ohio | 1.5% - 4.8% Progressive State | $3,800 |
| Pennsylvania (Scranton) | 3.07% State + 3.40% Local | $3,780 |
| New Jersey | 1.4% - 10.75% Progressive State | $3,750 |
| Pennsylvania (Philadelphia) | 3.07% State + 3.74% Local | $3,700 |
| New York (Outside NYC) | 4.0% - 10.9% Progressive State | $3,650 |
| California | 1.0% - 13.3% State + 1.1% SDI | $3,600 |
| New York (Inside NYC) | State Tax + up to 3.9% City Tax | $3,500 |
No-Tax States (TX, FL, WA, etc.)
Tax Type / Rates
0% State Tax
Approx. Monthly Take-Home
$4,130
Pennsylvania (Harrisburg)
Tax Type / Rates
3.07% State + 2.00% Local
Approx. Monthly Take-Home
$3,850
Ohio
Tax Type / Rates
1.5% - 4.8% Progressive State
Approx. Monthly Take-Home
$3,800
Pennsylvania (Scranton)
Tax Type / Rates
3.07% State + 3.40% Local
Approx. Monthly Take-Home
$3,780
New Jersey
Tax Type / Rates
1.4% - 10.75% Progressive State
Approx. Monthly Take-Home
$3,750
Pennsylvania (Philadelphia)
Tax Type / Rates
3.07% State + 3.74% Local
Approx. Monthly Take-Home
$3,700
New York (Outside NYC)
Tax Type / Rates
4.0% - 10.9% Progressive State
Approx. Monthly Take-Home
$3,650
California
Tax Type / Rates
1.0% - 13.3% State + 1.1% SDI
Approx. Monthly Take-Home
$3,600
New York (Inside NYC)
Tax Type / Rates
State Tax + up to 3.9% City Tax
Approx. Monthly Take-Home
$3,500
The Income Scaling Effect: Gaps Widen at Higher Salaries
Because states like New York, California, and New Jersey use progressive brackets, the take-home gap between Pennsylvania (flat tax) or Texas (no tax) expands dramatically as your salary grows:
At $100,000 Annual Salary:
Texas: ~$5,800 / month
PA (Harrisburg): ~$5,500 / month (Difference: $300/mo or $3,600/yr)
At $150,000 Annual Salary:
Texas: ~$8,400 / month
PA (Harrisburg): ~$7,800 / month (Difference: $600/mo or $7,200/yr)
At $200,000 Annual Salary:
Texas: ~$10,800 / month
PA (Harrisburg): ~$10,000 / month (Difference: $800/mo or $9,600/yr)
Cost of Living: Real Purchasing Power
A higher paycheck matters little if your basic expenses skyrocket. Pennsylvania sits comfortably at 5% below the national average cost of living.
To match the purchasing power of a $60,000 salary in Pennsylvania, you would need to earn significantly more (or less) depending on where you move:
Ohio: $55,000 (10% below national avg)
Texas: $58,000 (3% below national avg)
Pennsylvania: $60,000 (5% below national avg)
New Jersey: $70,000 (15% above national avg)
New York: $75,000 (20% above national avg)
California: $85,000 (30% above national avg)
Key Considerations Before Moving for a Paycheck
Before moving solely for tax advantages, run through this quick checklist:
Sales & Property Taxes: Is the state income tax savings wiped out by higher real estate or everyday consumption taxes?
Local Market Salaries: Does the destination state offer the same competitive base pay for your specific industry (e.g., healthcare, tech, finance)?
Commuter Reciprocity: Remember that PA has tax reciprocity agreements with Indiana, Maryland, New Jersey, Ohio, Virginia, and West Virginia. If you cross these borders for work, you only pay your home state’s income tax rate, keeping filing simple. There is no reciprocity with New York or Delaware.
How to Save on Federal Taxes in Pennsylvania — 7 Legal Strategies
While Pennsylvania has its own flat state income tax of 3.07% and additional local taxes, you still owe federal income tax, Social Security tax, and Medicare tax.
Here are seven legal, highly effective strategies to reduce your federal tax bill and keep more of your paycheck. These approaches apply to both hourly and salaried workers across the Commonwealth.
Strategy 1: Increase Your 401(k) Contributions
Every dollar you contribute to a traditional workplace 401(k) reduces your federal taxable income. For example, if you earn $60,000 per year and increase your contribution by 1% ($600 per year or about $50 per month), your federal taxable income drops to $59,400. In the 12% federal tax bracket, this saves you approximately $72 in taxes annually, meaning your take-home pay only drops by about $44 per month.
Important Note for PA Residents: Pennsylvania does not allow a tax deduction for traditional 401(k) contributions on your state return. Your PA taxable income remains your full gross income. However, the federal tax savings still make this strategy incredibly valuable.
The money grows tax-deferred until withdrawal, and many employers offer matching contributions (essentially free money). If your employer matches 50% of your contributions up to 6% of your salary, that adds an extra $1,800 annually to a $60,000 salary.
How to Implement: Increase your workplace 401(k) contribution by 1% today, and set a reminder to bump it up by an additional 1% every year until you hit 10% to 15%.
Strategy 2: Max Out an HSA (Health Savings Account)
If you are enrolled in an HSA-eligible High-Deductible Health Plan (HDHP), an HSA provides a massive advantage. For 2026, the maximum annual contribution limits are:
$4,400 for self-only coverage
$8,750 for family coverage
(An extra $1,000 catch-up contribution is allowed if you are age 55 or older)
An HSA features a triple tax advantage: contributions are federal tax-deductible, funds grow completely tax-free, and withdrawals are tax-free when used for qualified medical expenses. Unlike an FSA, HSA balances roll over entirely from year to year and can be invested in mutual funds or stocks for long-term growth.
How to Implement: Contact your HR department or health insurance provider to open an HSA and arrange pre-tax payroll deductions to maximize your savings.
Strategy 3: Deploy an FSA (Flexible Spending Account)
If your employer offers a Health Care Flexible Spending Account (FSA), the maximum employee contribution limit for 2026 is $3,400. FSA contributions are taken out of your paycheck pre-tax, lowering your federal taxable gross income. These funds can pay for out-of-pocket medical, dental, vision, and prescription costs.
Because FSAs operate on a strict “use-it-or-lose-it” rule within the plan year, plan your elections carefully. For plans that allow a year-to-year carryover, the maximum allowable carryover amount into 2027 is $680.
How to Implement: Review your predictable medical expenses from last year, calculate your expected costs, and elect that targeted amount during your company’s open enrollment period.
Strategy 4: Properly Claim All Eligible Dependents
Each qualifying dependent child under the age of 17 earns you a $2,000 Child Tax Credit. This is a dollar-for-dollar reduction of your final federal tax liability. Other eligible dependents (such as elderly parents or adult children with permanent disabilities) can qualify you for a $500 Credit for Other Dependents.
Note: Pennsylvania does not offer dependent exemptions or child tax credits at the state level; these benefits strictly reduce your federal tax burden.
How to Implement: Do not wait until you file your annual tax return to receive this money. Update your IRS Form W-4 with your employer immediately following a qualifying life event (like the birth or adoption of a child) so they withhold less federal tax from each paycheck.
Strategy 5: Itemize Deductions (If You Exceed the Baseline)
For 2026, the federal standard deduction sits at $16,100 for single filers and $32,200 for married couples filing jointly. If your total itemized deductions exceed these baselines, you should itemize on Schedule A instead of taking the standard option.
Common itemized deductions include:
Mortgage Interest: Paid on up to $750,000 of home acquisition debt.
Charitable Donations: Contributions made to verified 501(c)(3) organizations.
Medical Expenses: The portion of unreimbursed medical bills that exceeds 7.5% of your Adjusted Gross Income (AGI).
State and Local Taxes (SALT): Includes your 3.07% PA state income tax, local Earned Income Tax (EIT), local property taxes, or school district taxes. Note: The federal SALT deduction is capped at a maximum of $10,000 per year ($5,000 if married filing separately).
How to Implement: Keep clean digital folders of all property tax receipts, annual mortgage interest statements (Form 1098), and charitable donation receipts to check if you clear the threshold.
Strategy 6: Establish a Traditional IRA
If your workplace lacks a retirement plan, or if you want to save beyond your 401(k), you can utilize a Traditional Individual Retirement Account (IRA). For 2026, the annual contribution limit is $7,500 (plus an extra $1,100 catch-up contribution if you are age 50 or older, raising the total to $8,600).
Your traditional IRA contributions are federally tax-deductible depending on your income level and whether you (or your spouse) are covered by an active retirement plan at work. For single individuals covered by a workplace plan, you receive a full deduction if your Modified Adjusted Gross Income (MAGI) is $81,000 or less.
Note: Just like a 401(k), Pennsylvania does not allow an IRA deduction on state tax returns, meaning your state tax applies to your gross income. The federal deduction, however, remains highly lucrative.
How to Implement: Open an IRA through any major automated brokerage or bank, and schedule regular automatic transfers to pace your contributions throughout the year.
Strategy 7: Harvest Investment Capital Losses
If you hold taxable investment accounts (outside of an IRA or 401k) containing stocks, bonds, or mutual funds that have dropped below their original purchase price, you can use tax-loss harvesting. Selling these losing assets realizes a capital loss, which can offset any capital gains you realized from winning investments.
If your overall capital losses exceed your total capital gains for the year, you can use up to $3,000 of that excess loss to directly offset your ordinary income (like your regular salary or wages). Any remaining losses carry forward to future tax years indefinitely.
How to Implement: Conduct a portfolio review alongside your financial professional or investment platform every November or December to identify underperforming assets to strategically sell.
Strategy Selection Matrix
| Scenario / Priority | Top Recommended Strategy | Key Structural Rule |
|---|---|---|
| Workplace matches retirement savings | Strategy 1: 401(k) | Always contribute enough to secure the full employer match; it is free money. |
| Enrolled in an eligible HDHP plan | Strategy 2: HSA | Maximize this account first for its triple-tax-free structure and rolling balance. |
| Raising children under 17 | Strategy 4: W-4 Adjustments | Adjust your W-4 right away to increase your biweekly take-home pay. |
| High local property & state taxes | Strategy 5: Itemize Deductions | Track all receipts to see if your total exceeds the $16,100 (Single) or $32,200 (MFJ) mark. |
| No 401(k) option at your company | Strategy 6: Traditional IRA | Use an individual brokerage account to lower federal AGI up to the $7,500 limit. |
Workplace matches retirement savings
Top Recommended Strategy
Strategy 1: 401(k)
Key Structural Rule
Always contribute enough to secure the full employer match; it is free money.
Enrolled in an eligible HDHP plan
Top Recommended Strategy
Strategy 2: HSA
Key Structural Rule
Maximize this account first for its triple-tax-free structure and rolling balance.
Raising children under 17
Top Recommended Strategy
Strategy 4: W-4 Adjustments
Key Structural Rule
Adjust your W-4 right away to increase your biweekly take-home pay.
High local property & state taxes
Top Recommended Strategy
Strategy 5: Itemize Deductions
Key Structural Rule
Track all receipts to see if your total exceeds the $16,100 (Single) or $32,200 (MFJ) mark.
No 401(k) option at your company
Top Recommended Strategy
Strategy 6: Traditional IRA
Key Structural Rule
Use an individual brokerage account to lower federal AGI up to the $7,500 limit.
Frequently Asked Questions — Pennsylvania Paycheck & Taxes
Here are answers to the most common questions people ask about Pennsylvania paychecks, taxes, and take-home pay.
Pennsylvania has a flat state income tax rate of 3.07 percent for all income levels. Unlike progressive states where higher incomes are taxed at higher rates, Pennsylvania charges the same percentage whether you earn $30,000 or $300,000 per year. Pennsylvania has no standard deduction and no personal exemptions. You pay state tax on your full gross income.
Yes, many Pennsylvania cities have local income taxes. Most cities charge an Earned Income Tax or EIT ranging from 0.312 percent to 3.75 percent. Many cities also charge a Local Services Tax or LST which is a fixed dollar amount of $10, $52, or $156 per year. Philadelphia has a Wage Tax of 3.74 percent for residents and 3.43 percent for non-residents instead of EIT.
LST stands for Local Services Tax. It is a fixed dollar tax collected by many Pennsylvania cities. Most workers pay $52 per year. Low-wage earners earning less than $12,000 per year pay $10 per year or are exempt. Workers in Philadelphia and some other cities pay $156 per year. Your employer divides the annual amount by the number of pay periods and deducts a small amount from each paycheck.
The Philadelphia Wage Tax is a local tax paid by anyone who works in Philadelphia. Philadelphia residents pay 3.74 percent. Non-residents who work in Philadelphia pay 3.43 percent. This tax replaces the EIT and LST that other Pennsylvania cities use. If you work in Philadelphia, you pay this tax regardless of where you live.
Yes, Pennsylvania has reciprocity agreements with Indiana, Maryland, New Jersey, Ohio, Virginia, and West Virginia. If you live in one of these states and work in Pennsylvania, you pay state income tax only to your home state. If you live in Pennsylvania and work in one of these states, you pay state income tax only to Pennsylvania. Reciprocity does NOT apply to local taxes like the Philadelphia Wage Tax.
The minimum wage in Pennsylvania for 2026 is $7.25 per hour, which follows the federal minimum wage rate. Overtime pay is one and a half times your regular rate for all hours worked over 40 hours per week.
Let's walk through Noah's example: single filer, $100,000 salary, living in Harrisburg, contributing 5% to his 401(k).
Gross annual salary: $100,000
401(k) contribution (5%): −$5,000 → taxable income base: $95,000
Federal standard deduction (2026, single): −$16,100 → federal taxable income: $78,900
Federal income tax (2026 brackets): $11,211.96
Pennsylvania state tax (flat 3.07% on full $100,000 gross — no deductions apply): $3,070
Harrisburg local EIT (2.00%): $2,000
Local Services Tax (LST): $52/year
Social Security (6.2%): $6,200
Medicare (1.45%): $1,450
Total deductions: ~$29,983.96
Estimated annual take-home: ~$70,016 (before health insurance or other pre-tax benefits)
Note: this is an estimate. Your actual take-home depends on your city, filing status, and any additional pre-tax deductions like health insurance or HSA/FSA contributions.
No. Pennsylvania does not have a state standard deduction or personal exemptions — its flat 3.07% state income tax applies to your full taxable gross income. This is different from the federal standard deduction, which for 2026 is $16,100 (single filers), $32,200 (married filing jointly), and $24,150 (head of household). The federal standard deduction reduces your federal taxable income only — it has no effect on what you owe Pennsylvania.
No. Pennsylvania does not tax Social Security benefits, 401k withdrawals, IRA withdrawals, pension income, or annuity payments. This makes Pennsylvania attractive for retirees who want to keep more of their retirement savings. However, Pennsylvania does tax earned income from work including wages, salaries, bonuses, commissions, and self-employment income.
No. Pennsylvania does not have an estate tax or inheritance tax. This is different from some neighboring states like New Jersey which had an estate tax (repealed for deaths after January 1, 2018) and Maryland which still has an inheritance tax. You do not need to worry about either tax affecting your family's inheritance.
Because of the reciprocity agreement between Pennsylvania and New Jersey, you pay New Jersey state income tax only. Your employer in Pennsylvania should withhold New Jersey tax from your paycheck, not Pennsylvania tax. You never file a Pennsylvania state tax return. However, you still pay the Philadelphia Wage Tax of 3.43 percent if you work in Philadelphia because reciprocity does not apply to local taxes.
There is no reciprocity agreement between Pennsylvania and Delaware. You pay Delaware state income tax on your wages earned in Delaware. Your employer withholds Delaware tax. You then file a Pennsylvania tax return and claim a credit for taxes paid to Delaware. You pay the higher of the two state taxes, not both. You must file tax returns in both states.
PA SUI stands for Pennsylvania State Unemployment Insurance. Pennsylvania is one of only a few states where employees contribute to unemployment insurance. The PA SUI rate for employees is 0.07 percent on the first $10,000 of wages. On a $50,000 salary, you pay only $7 per year. On a $100,000 salary, you also pay only $7 per year because the tax stops when you earn more than $10,000.
For 2026, the Social Security wage base is $184,500. You pay 6.2 percent Social Security tax on the first $184,500 you earn. Once you earn more than this amount, the Social Security tax stops for the rest of the year. Your paychecks become larger after you reach this limit. For 2025, the limit was $176,100.
Your actual paycheck may differ from our calculator for several reasons. Your employer may use different withholding calculations based on your specific W-4 and PA state withholding forms. You may have additional deductions like life insurance, disability insurance, or union dues. You may have wage garnishments or child support withholdings. Your bonus or commission may have been paid in a different pay period. Your health insurance premiums may be different from our default assumption. Always check your pay stub and compare it to our calculator.
Yes. Our calculator works for both hourly and salaried workers. Switch between hourly and salary mode with one click. Enter your hourly rate and hours worked per week. You can also add overtime hours and the calculator will apply the overtime rate of one and a half times your regular hourly rate. The calculator automatically calculates your gross pay, taxes, and net take-home pay, including Pennsylvania state tax (3.07 percent), local EIT based on your city, LST based on your city, Philadelphia Wage Tax if applicable, and PA SUI (0.07 percent). The minimum wage in Pennsylvania for 2026 is $7.25 per hour.
Philadelphia has its own Wage Tax instead of the standard local EIT. Residents pay 3.74% and non-residents who work in Philadelphia pay 3.43% on gross wages. This replaces — it does not stack with — the local Earned Income Tax (EIT) that other PA cities charge. You'll still owe Pennsylvania's flat 3.07% state tax and the $156/year Local Services Tax (LST) on top of the Wage Tax.
Pittsburgh charges a 3.00% local Earned Income Tax (EIT) plus a $52/year Local Services Tax (LST). This is separate from — and in addition to — Pennsylvania's flat 3.07% state income tax. Our calculator applies both automatically when you select Pittsburgh as your work city.
A Pennsylvania paycheck typically has five layers of deductions: federal income tax (based on your bracket), Pennsylvania's flat 3.07% state tax, local EIT (0.5%–3.75% depending on your city) or Philadelphia's Wage Tax, a flat LST ($10–$156/year), and FICA (6.2% Social Security + 1.45% Medicare). There's no PA standard deduction, so state tax applies to your full gross income.
Pennsylvania's state income tax is a flat 3.07% — the lowest flat rate of any US state — applied to all taxable income with no brackets, no standard deduction, and no personal exemptions. On top of that, most residents also owe a local EIT (typically 0.5%–3.75%) or, in Philadelphia, the Wage Tax (3.74% resident / 3.43% non-resident).
