Overview of Pennsylvania Taxes
Pennsylvania has a flat state income tax rate of 3.07%. This is the lowest rate among the eight states that have flat income tax rates. However, many cities in the Keystone State also collect local income taxes.
This calculator reflects the 2018 federal withholding tax changes.
Click here to learn more about how the Trump Tax Plan will affect you.
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- Our Tax Expert
Jennifer Mansfield, CPA Tax
Jennifer Mansfield, CPA, JD/LLM-Tax, is a Certified Public Accountant with more than 30 years of experience providing tax advice. SmartAsset’s tax expert has a degree in Accounting and Business/Management from the University of Wyoming, as well as both a Masters in Tax Laws and a Juris Doctorate from Georgetown University Law Center. Jennifer has mostly worked in public accounting firms, including Ernst & Young and Deloitte. She is passionate about helping provide people and businesses with valuable accounting and tax advice to allow them to prosper financially. Jennifer lives in Arizona and was recently named to the Greater Tucson Leadership Program.
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Pennsylvania Paycheck Calculator
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Pennsylvania Paycheck Quick Facts
How Your Pennsylvania Paycheck Works
If you’ve relocated to Pennsylvania from another state, it’s understandable for you to be feeling a little unsure of what to expect with regard to your new paycheck. After all, it’s tricky to figure out what your take-home pay will be after taxes and other monies are withheld. To start, your Pennsylvania employer will withhold FICA, federal and state income taxes from your paychecks, and depending on where in the state you live, you will likely also have to pay local income taxes.
The amount of federal income taxes withheld will depend on your pay and the withholding information that you put on your W-4. Withholding will also be slightly different for the 2018 tax year (versus 2017) because of President Trump's new tax plan. The IRS released new withholding guidelines in January and taxpayers should have seen changes to their paychecks, to reflect the new tax plan, starting in February 2018. For the time being, you do not need to fill out a new W-4. Your employer will use the withholdings on your current form.
As for your FICA taxes, 6.2% of your income goes to Social Security taxes. Your employer is responsible for matching this amount for a total of 12.4% that the government receives to fund the program. Medicare taxes follow a similar process, with 1.45% being collected from both the employee and the employer (for a total of 2.9%). Together, Social Security and Medicare taxes make up FICA (Federal Insurance Contributions Act) taxes.
If you’re self-employed, you will be responsible for paying the full percentages of FICA taxes yourself.
Whether you work for Philadelphia International Airport or the University of Pittsburgh, you'll need to pay federal income taxes. These taxes will be withheld from your pay throughout the year to cover a range of public expenses. How much your employer withholds in federal income taxes depends on factors like your salary, your marital status, how many allowances you claim and if you choose to have additional tax withheld from your paychecks.
Pennsylvania Median Household Income
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Pennsylvania levies a flat state income tax rate of 3.07%. Your income level and marital status will not affect the income tax rate you pay at the state level. Pennsylvania is one of just eight states that has a flat income tax rate, and of those states, it has the lowest tax rate.
Living in Pennsylvania will be a very different experience for you if you’ve relocated from an area with no local taxes. It would be easier to keep track of areas in the state without local income taxes. Pennsylvania levies local income taxes in 2,492 municipalities. And of Pennsylvania’s 500 school districts, 469 of them levy a local income tax.
If you're planning on relocating to Pennsylvania and will be purchasing a home, you'll want to refer to this Pennsylvania mortgage guide for key information about mortgages in the state. The table below lists the local income tax rates in some of the state's biggest cities.
Local Income Taxes
How You Can Affect Your Pennsylvania Paycheck
There are several ways you can have an impact on your paycheck.
One aspect that you can control is the number of allowances you choose to claim when you fill out your W-4 form. Claiming more allowances means more money will remain in your paycheck rather than being withheld each pay period. Opting for more allowances means that you’ll have more money available to you for covering financial needs through the year. You can put this money toward savings, expenses or investments. The catch with this option is that you might be sacrificing your tax return and instead face the risk of owing taxes to the IRS at the end of the year.
Claiming fewer allowances means that more of your money will be withheld from your paycheck. This option lowers the likelihood of owing any money to the IRS in April, but comes with drawbacks as well. During the tax year, this money will be unavailable to you until you receive your return, meaning you'll have less money to invest or save throughout the year. It's important to consider how these options fit with your unique financial situation before deciding which route is right for you.
Some people can’t stomach the thought of owing a lump sum to the IRS and respond by opting for an additional dollar withholding from each of their paychecks to go toward their annual income taxes. Say, for example, you want $20 withheld from each of your paychecks, you can simply indicate that on your W-4 form.
Pennsylvania taxpayers can also opt to lower their taxable income by utilizing pre-tax options like a 401(k) or 403(b) or a Health Savings Account. If you choose to save for the future in a pre-tax retirement account like a 401(k) or 403(b), that money will be deducted from your paycheck before taxes are taken out. This means you are actually lowering your taxable income which may help you save a few dollars in taxes.
A Health Savings Account (HSA) or Flexible Spending Account (FSA) works in a similar fashion and you can use the money you stash in these accounts to pay for certain medical-related expenses like copays. Keep in mind though that funds you put in a HSA or FSA do expire after a certain period of time, so you have to use them before that deadline or they will be lost.
Pennsylvania Top Income Tax Rate
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Most Paycheck Friendly Places
SmartAsset's interactive map highlights the most paycheck friendly counties across the country. Zoom between states and the national map to see data points for each region, or look specifically at one of the four factors driving our analysis: Semi-Monthly Paycheck, Purchasing Power, Unemployment Rate, and Income Growth.
Methodology Our study aims to find the most paycheck friendly places in the country. These are places in the country with favorable economic conditions where you get to keep more of the money you make. To find these places we considered four different factors: semi-monthly paycheck, purchasing power, unemployment rate and income growth.
First, we calculated the semi-monthly paycheck for a single individual with two personal allowances. We applied relevant deductions and exemptions before calculating income tax withholding. To better compare withholding across counties we assumed a $50,000 annual income. We then indexed the paycheck amount for each county to reflect the counties with the lowest withholding burden.
We then created a purchasing power index for each county. This reflects the counties with the highest ratio of household income to cost of living. We also created an unemployment rate index that shows the counties with the lowest unemployment. For income growth, we calculated the annual growth in median income over five years for each county and indexed the results.
Finally, we calculated the weighted average of the indices to yield an overall paycheck friendliness score. We used a one half weighting for semi-monthly paycheck and a one-sixth weighting for purchasing power, unemployment rate and income growth. We indexed the final number so higher values reflect the most paycheck friendly places.
Sources: SmartAsset, government websites, US Census Bureau 2016 5-Year American Community Survey, MIT Living Wage Study, Bureau of Labor Statistics