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Pennsylvania
The Facts on Pennsylvania’s Tax Climate
Last updated July 1, 2009
Here are some basic facts on Pennsylvania’s tax system and how it compares to other states:
Tax Freedom Day Arrives on April 14 in Pennsylvania
Tax Freedom Day is the day when Americans finally have earned enough money to pay off their total tax bill for the year. In 2009, Pennsylvania taxpayers had to work until April 14 to pay their total tax bill, ranking it 11th highest nationally. That's one day earlier than national Tax Freedom Day (April 13). The Tax Freedom Days of neighboring states are: New York, April 25 (ranked 3rd nationally); New Jersey, April 29 (ranked 2nd nationally); Delaware, April 11 (ranked 20th nationally); Maryland, April 19 (ranked 5th nationally); West Virginia, April 1 (ranked 45th nationally); and Ohio, April 11 (ranked 21st nationally).
Full study of Tax Freedom Day, nationwide and in each state
Pennsylvania's State/Local Tax Burden Above National Average
Estimated at 10.2% of income, Pennsylvania's state/local tax burden percentage ranks 11th highest nationally, above the national average of 9.7%. Pennsylvania taxpayers pay $4,463 per capita in state and local taxes.
Pennsylvania's State-Local Tax Burden, 1977-Present
Other States' State/Local Tax Burdens
Historical Chart Comparing All States' State/Local Tax Burdens from 1977 to 2008
Pennsylvania's 2010 Business Tax Climate Ranks 27th
Pennsylvania ranks 27th in the Tax Foundation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. Neighboring states ranked as follows: New York (49th), New Jersey (50th), Delaware (8th), Maryland (45th), West Virginia (37th) and Ohio (47th).
50-State Comparison of Business Tax Climates (data only)
2009 State Business Tax Climate Index, Sixth Edition (full study)
Pennsylvania's Individual Income Tax System
Pennsylvania's personal income tax system consists of a flat rate of 3.07% on all personal income. Pennsylvania's top rate ranks 40th highest among states levying an individual income tax. However, many Pennsylvania taxpayers also pay a local tax on earned income, commonly 1% or 1.5%, with Philadelphia well above that. Pennsylvania's 2006 individual income tax collections at both state and local levels came to $995 per person, which ranked 16th highest nationally.
50-State Table of Individual Income Tax Rates
50-State Table of State Individual Income Tax Collections
50-State Table of State and Local Individual Income Tax Collections Per Capita
Pennsylvania's Corporate Income Tax System
Pennsylvania's corporate tax structure consists of a flat rate of 9.99% on all corporate income. Among states levying corporate income taxes, Pennsylvania's rate ranks 2nd highest nationally. In 2007, state-level corporate tax collections (excluding local taxes) were $184 per capita, which ranked 17th highest nationally.
50-State Table of Corporate Income Tax Rates, 2000-2009
50-State Table of State and Local Corporate Income Tax Collections Per Capita and Per Household, 2005
50-State Table of State Corporate Income Tax Collections Per Capita, 2006
Pennsylvania Levies Sales Tax Above National Median; Gasoline Tax among Highest Nationally
Pennsylvania levies a 6% general sales or use tax on consumers, right at the national median. State and local governments combined collected $695 per capita in general sales taxes in 2006, which ranks 39th highest nationally. Pennsylvania's gasoline tax stands at 32.3 cents per gallon, ranking 10th highest nationally. Pennsylvania's cigarette tax stands at $1.35 per pack of twenty and ranks 21st highest nationally. The sales tax was adopted in 1953, the gasoline tax in 1921 and the cigarette tax in 1937.
50-State Table of Sales and Excise Tax Rates
50-State Table of State and Local General Sales and Gross Receipts Tax Collections Per Household and Per Capita, Fiscal Year 2005
Pennsylvania Property Taxes: Middle of the Pack
Pennsylvania is one of the 37 states that collect property taxes at both the state and local levels. As in most states, local governments collect far more. Pennsylvania's localities collected $1,142.79 per capita in property taxes in fiscal year 2006, which is the latest year the Census Bureau published state-by-state property tax collections. At the state level, Pennsylvania collected $4.88 per capita during FY 2006, making its combined state/local property taxes $1,147.68, which ranks 20th highest nationally.
State property tax collections per capita by state
Federal Tax Burdens and Expenditures: Pennsylvania is a Beneficiary State
Pennsylvania taxpayers receive slightly more federal funding per dollar of federal taxes paid compared to the average state. Per dollar of Federal tax collected in 2005, Pennsylvania citizens received approximately $1.07 in the way of federal spending. This ranks the state 28th nationally and represents a rise from 1995 when Pennsylvania received $1.05 per dollar of federal taxes paid and ranked 28th nationally. Neighboring states and the amount of federal spending they received per dollar of federal taxation paid were as follows: New York ($0.79), New Jersey ($0.61), Delaware ($0.77), Maryland ($1.30), West Virginia ($1.76), and Ohio ($1.05).
Comparing the amount of federal taxes sent to Washington with the amount of federal spending coming back to the state
