Pennsylvania has a flat 3.07 percent individual income tax rate. There are also jurisdictions that collect local income taxes. Pennsylvania has a flat 7.49 percent corporate income tax rate, reduced from 7.99 percent in 2025 as part of a multi-year phasedown, a 6.00 percent state sales tax rate, and an average combined state and local sales tax rate of 6.34 percent. Pennsylvania has a 1.26 percent effective property tax rate on owner-occupied housing value. Pennsylvania has an inheritance tax. Pennsylvania’s gas tax is 58.7 cents per gallon, and its cigarette excise tax is $2.60 per pack of 20 cigarettes.
Pennsylvania raises tax revenue primarily through individual income taxes (26.3 percent of total state and local tax revenue), property taxes (25.7 percent), and other taxes (22.3 percent). Pennsylvania collects $6,869 in state and local tax collections per capita, carries $8,713 in state and local debt per capita, and has a 70 percent funded ratio of public pension plans. Pennsylvania’s tax system ranks 36th overall on the 2026 State Tax Competitiveness Index.
Each state’s tax code is a multifaceted system with many moving parts, and Pennsylvania is no exception. Use the tabs below to compare Pennsylvania taxes with other states and to see how Pennsylvania raises tax revenue. You can also browse our tax maps, which are compiled from our annual publication, Facts & Figures 2026: How Does Your State Compare?
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The State Tax Competitiveness Index enables policymakers, taxpayers, and business leaders to gauge how their states’ tax systems compare. While there are many ways to show how much state governments collect in taxes, the Index evaluates how well states structure their tax systems and provides a road map for improvement.
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Facts & Figures serves as a one-stop state tax data resource that compares all 50 states on over 40 measures of tax rates, collections, burdens, and more.
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Individual income taxes are a major source of state government revenue, accounting for more than a third of state tax collections. How do income taxes compare in your state?
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Retail sales taxes are an essential part of most states’ revenue toolkits, responsible for nearly a quarter of combined state and local tax collections.
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Forty-four states levy a corporate income tax, with top rates ranging from a 2 percent flat rate in North Carolina to an 11.5 percent top marginal rate in New Jersey. Four states—Georgia, Nebraska, North Carolina, and Pennsylvania—reduced their corporate income tax rates effective January 1, 2026.
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Property taxes are the primary tool for financing local governments. While no taxpayers in high-tax jurisdictions will be celebrating their yearly payments, property taxes are largely rooted in the benefit principle of taxation: the people paying the property tax bills are most often the ones benefiting from the services.
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Well-designed Net Operating Loss (NOL) provisions benefit the economy by smoothing business income, which mitigates entrepreneurial risk and helps firms survive economic downturns.
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States are unprepared for the ongoing shift to remote and flexible work arrangements, or for the industries and activities of today, to say nothing of tomorrow. In some states, moreover, existing tax provisions exacerbate the impact of high inflation and contribute to the supply chain crisis.
40 min read
The pandemic has accelerated changes in the way we live and work, making it far easier for people to move—and they have. As states work to maintain their competitive advantage, they should pay attention to where people are moving, and try to understand why.
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While there are many ways to show how much is collected in taxes by state governments, our State Business Tax Climate Index is designed to show how well states structure their tax systems and provides a road map for improvement.
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Under the House Democrats’ tax plan, companies in 21 states and D.C. would face a higher corporate tax rate than in any country in the OECD.
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The six counties with the highest median property tax payments all have bills exceeding $10,000—Bergen, Essex, and Union Counties in New Jersey, and Nassau, Rockland, and Westchester counties in New York. All six are near New York City, as is the next highest, Passaic County, New Jersey ($9,881).
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It is important to understand how the SALT deduction’s benefits have changed since the SALT cap was put into place in 2018 before repealing the cap or making the deduction more generous. Doing so would disproportionately benefit higher earners, making the tax code more regressive.
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Neither Anchorage, Alaska, nor Portland, Oregon, impose any state or local sales taxes. Honolulu, Hawaii, has a low rate of 4.5 percent and several other major cities, including Milwaukee and Madison, Wisconsin, keep overall rates modest.
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A vehicle miles traveled (VMT) proposal gaining steam in Pennsylvania would be the equivalent of a state gas tax of more than $2 per gallon, and that’s not all the Commonwealth is considering.
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