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.
2 min read
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?
9 min read
Retail sales taxes are an essential part of most states’ revenue toolkits, responsible for nearly a quarter of combined state and local tax collections.
18 min read
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.
9 min read
Growing cigarette tax levels and differentials have made cigarette smuggling both a national problem and a lucrative criminal enterprise.
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For Congress, work on the One Big Beautiful Bill Act is done. But in state capitols, the work has not yet begun. Many of the tax changes in the federal reconciliation act flow through to state tax codes—automatically in some states, and subject to an update in states’ Internal Revenue Code conformity date in others.
39 min read
However states choose to respond to other tax provisions of the One Big Beautiful Bill Act, they should conform to the pro-growth provisions, which represent a marked improvement in the corporate tax code.
12 min read
However well-intended they may be, sales tax holidays remain the same as they always have been—ineffective and inefficient.
16 min read
The One Big Beautiful Bill’s changes to the taxation of international income have surprising implications for state codes, yielding tax increases and a revised tax base that, through quirks of state incorporation, bears very little resemblance to the federal base and almost nothing of its purpose.
10 min read
The five states with the highest average combined state and local sales tax rates are Louisiana (10.11 percent), Tennessee (9.61 percent), Arkansas (9.48 percent), Washington (9.47 percent), and Alabama (9.44 percent).
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The Senate’s version of the OBBB restores the benefit of avoiding the SALT deduction cap with PTETs for all pass-through businesses, while placing new limits on the extent of the workarounds.
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In the United States, taxes are the single most expensive ingredient in beer. The tax burden accounts for more of the final price of beer than labor and materials combined—the many different layers of applicable taxes combining to total as much as 40.8 percent of the retail price.
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The significant disparity in tax rates across states underscores the complex tax and regulatory environment governing distilled spirits.
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As the US House hashes out its “One, Big, Beautiful Bill,” statehouse lawmakers are watching closely, given the impact of both its tax and spending provisions on state budgets.
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