Pennsylvania Paycheck Tax Calculator (2026 Flat 3.07%)

Pennsylvania’s 3.07% flat rate is the lowest state income tax among the flat-tax states except Ohio, and it has not moved in over two decades. But no Pennsylvania paycheck stops at 3.07%: under Act 32, nearly every municipality and school district combination levies a local earned income tax, typically about 1%, withheld by the employer through a county collection system. Philadelphia sits outside that system entirely with the country’s largest municipal wage tax.

Pennsylvania is also unusual in what its base includes: no standard deduction, no personal exemptions, and eight separate income classes with almost no netting between them. And it is one of the handful of states with a convenience-of-the-employer rule, which matters to remote workers whose employer sits in Pennsylvania while they do not.

The calculator above applies the flat state rate. This guide adds the local layers, the reciprocity map, and the traps that actually generate Pennsylvania notices.

Pennsylvania taxes personal income at 3.07% with no standard deduction, no personal exemption, and no preferential capital gains rate. Income is sorted into eight classes (compensation, interest, dividends, business profits, gains, rents, estates, gambling), and a loss in one class generally cannot offset income in another. Retirement income is a notable exclusion: Social Security, and pension and retirement plan distributions after retirement age, are not taxed.

Because the rate is flat and deductionless, state withholding is essentially self-executing at 3.07% of compensation, and there is no state withholding allowance form to manage. Supplemental wages are withheld at the same 3.07%.

Outside Philadelphia, Pennsylvania municipalities and school districts levy earned income taxes under Act 32, collected by county tax collection districts through employer withholding. You certify your home and work municipalities on a Residency Certification Form; the employer withholds the higher of your resident rate or the workplace nonresident rate, and an annual local return reconciles it.

Rates are typically about 1% combined, but some cities run materially higher. Nonresidents working in a Pennsylvania municipality owe the workplace nonresident EIT unless their home municipality’s rate is higher. Remote workers shift EIT to their home municipality for days worked at home, another reason the certification form should match reality.

Philadelphia is not part of Act 32. Its wage tax applies to all wages of city residents regardless of where they work, and to nonresidents for work physically performed in the city. For pay dates from July 1, 2025 through June 30, 2026, the rates are 3.74% for residents and 3.43% for nonresidents; on July 1, 2026 they step down to 3.735% and 3.425% as part of a multi-year reduction schedule.

Nonresident suburbanites who work hybrid schedules can request refunds for days worked outside the city, with employer verification. New Jersey residents working in Philadelphia get no help from PA/NJ state reciprocity (the wage tax is municipal), but New Jersey allows its resident credit against the Philadelphia tax.

The resident-versus-nonresident line is also a housing decision: at $180,000 of wages, living inside the city limits costs about $560 more per year in wage tax than commuting in from a suburb at the nonresident rate, before the suburb’s own EIT is netted against it. Small next to rent differences, but worth knowing before treating the two rates as interchangeable.

Pennsylvania has W-2 wage reciprocity with Indiana, Maryland, New Jersey, Ohio, Virginia, and West Virginia, the largest agreement set of any state in our calculator series. Commuters file Form REV-419 with a Pennsylvania employer (or the partner state’s form going the other way) so only the home state withholds. As always, the agreements cover employee compensation only: 1099, locum, and business income still runs through nonresident returns and credits.

Pennsylvania also applies a convenience-of-the-employer rule: a nonresident whose job is based in Pennsylvania and who works remotely for personal convenience can find those remote days sourced to Pennsylvania. Between reciprocity partners the rule rarely bites (the home state taxes the wages anyway), but for residents of non-partner states such as New York or Delaware it can produce genuine double-tax friction that needs credit planning.

The reciprocity dividend is easy to quantify. A Bucks County resident earning $100,000 across the river in New Jersey files Form NJ-165 and pays only Pennsylvania: $3,070 at the flat 3.07%. Without the agreement she would file a New Jersey nonresident return owing about $4,244 under New Jersey’s 2026 brackets, then claim a Pennsylvania credit capped at its own $3,070, eating the $1,174 difference. Reciprocity does not just save a filing here; because Pennsylvania is the cheaper state, it saves real money. Going the other way, a New Jersey resident working in Philadelphia keeps the reciprocity exemption from Pennsylvania state tax but still pays the city’s nonresident wage tax, which New Jersey then credits.

For a W-2 employee living and working in the same suburban municipality, Pennsylvania is close to self-executing: 3.07% state plus a stable ~1% EIT, both withheld, with a short annual local reconciliation. The complexity concentrates around Philadelphia (hybrid-day refunds, the resident-versus-nonresident line), cross-border work outside the six reciprocity partners, remote work under the convenience rule, and 1099 income that no one withholds local tax on.

One more Pennsylvania particular: because the tax has no deduction and the classes do not net, business owners and investors sometimes owe Pennsylvania tax in years with little or no federal taxable income. The state return is not a copy of the federal return, and treating it as one is a recurring source of amended filings.

Projections earn their keep in four Pennsylvania patterns. Philadelphia-adjacent professionals, where the resident-versus-nonresident wage tax line, hybrid-day refunds, and the New Jersey credit interact on every paycheck. Locum physicians and 1099 clinicians working Pennsylvania facilities, who owe state tax, workplace EIT or city wage tax, and estimates that no agency withholds. Cross-border commuters outside the six reciprocity partners, especially New York residents with Pennsylvania-based employers where two convenience rules can collide. And owners whose income classes do not net, where Pennsylvania tax shows up in federal-loss years and quarterly planning prevents the surprise.

A realistic scenario: a hospitalist lives in Wilmington, Delaware and works a Philadelphia W-2 contract plus 1099 moonlighting in Scranton. Delaware is not a reciprocity partner, so Pennsylvania taxes the W-2 wages and Philadelphia adds its nonresident wage tax; Delaware then credits under its own rules. The Scranton 1099 income owes Pennsylvania state tax plus Scranton’s above-average nonresident EIT, all through estimates. Layer in Pennsylvania’s convenience rule for any remote days and you have three jurisdictions, two local systems, and one very good reason the projection happens in February rather than the following April.