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 utilize flat rates. However, many cities in the Keystone State also collect local income taxes.
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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
Pennsylvania Paycheck Quick Facts
- Pennsylvania income tax rate: 3.07%
- Median household income: $59,445 (U.S. Census Bureau)
- Number of municipalities and school districts that have local income taxes: 2,492
How Your Pennsylvania Paycheck Works
Without the help of a paycheck calculator, it’s tricky to figure out what your take-home pay will be after taxes and other monies are withheld. For starters, all Pennsylvania employers will withhold federal and state income taxes from your paychecks, as well as FICA taxes. Depending on where in the state you live, you will likely also pay local income taxes.
The amount of federal income taxes withheld will depend on your income level and the withholding information that you put on your W-4. Withholdings also changed slightly for the 2018 tax year because of President Trump's new tax plan. There weren't any changes in 2019, but the IRS made notable updates to the 2020 W-4.
Instead of using allowances, the new form applies a five-step process that requires filers to prove and enter annual dollar amounts for any additional income or jobs, along with some other personal information. There's no need to complete the form if you were hired before 2020, unless you're changing your withholdings. On the other hand, anyone starting a new job on or after Jan. 1, 2020 will need to fill out the new W-4.
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 you and your employer (for a total of 2.9%). Any income you have in excess of $200,000 is subject to an additional Medicare surtax of 0.9%. (Your employer doesn’t match this surtax.) Together, Social Security and Medicare taxes make up FICA (Federal Insurance Contributions Act) taxes.
If you’re self-employed, you are responsible for paying the full FICA taxes yourself. Luckily, there is a tax deduction that you can take when you file your taxes in order to alleviate the burden of that high self-employment tax.
Whether you work for Philadelphia International Airport or the University of Pittsburgh, your employer also withholds money from your paychecks to pay federal income taxes. These taxes are 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 and whether or not 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%. Therefore, your income level and filing 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 rate. Just like federal income taxes, your employer will withhold money to cover this state income tax. Pennsylvania also levies local income taxes in over 2,500 municipalities. And of Pennsylvania’s 500 school districts, 472 of them levy a local income tax.
A financial advisor in Pennsylvania can help you understand how taxes fit into your overall financial goals. Financial advisors can also help with investing and financial plans, including retirement, homeownership, insurance and more, to make sure you are preparing for the future.
If you're planning on relocating to Pennsylvania and want to purchase a home, 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
The best way to have an impact on your paycheck, and in turn your taxes, is to fine-tune them by opting for an additional dollar withholding from each of your paychecks. There is a line on the W-4 where you can enter the amount of additional withholding you’d like. So if you wanted your employer to withhold an additional $20 from each paycheck, you’d just write "20" on that line of your W-4. Note that although this will result in slightly smaller paychecks each pay period, your tax bill may turn into a refund come tax time.
Unlike most other states in the U.S., Pennsylvania does not exempt contributions to 401(k)s, 403(b)s and other retirement accounts from income taxes and withholdings. However, once you reach retirement and begin taking distributions, you won't be taxed on any of your money, investment earnings included.
Health savings accounts (HSAs) and flexible spending accounts (FSAs) work normally, though. You contribute pre-tax money so that you can use it later for certain medical-related expenses, like copays. Keep in mind, though, that only $500 rolls over from one year to the next in an FSA. That means you’ll lose money if you contribute more than $500 but don’t use it before the end of the year.
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 2017 5-Year American Community Survey, MIT Living Wage Study, Bureau of Labor Statistics