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Pennsylvania · the numbers
Pennsylvania figures at a glance, 2026
The Pennsylvania numbers for the 2026 return in one place: the rate, the Tax Forgiveness lines, the credits, the five deductions, the estimated-payment threshold, the dates, the inheritance tax classes and the local figures, each with a one-line note, and a short list of what changed from 2025. For anyone who files here, and for anyone checking a preparer’s work.
By Charles Trautman, EA, editor
Need to Know Tax · written from Pennsylvania Department of Revenue sources, November 3, 2026; updated November 12, 2026 after the election · not yet reviewed by a Pennsylvania practitioner
Pennsylvania publishes fewer numbers than almost any state because its income tax has almost no moving parts: one rate, no deduction, no exemption, no brackets, and a Tax Forgiveness table that has not been indexed in years. Most of the figures below are the same as last year’s and the year before. The ones that moved: the estimated-payment threshold rose to $14,000, the Working Pennsylvanians Tax Credit entered its second year with a 2026 maximum still to come, Philadelphia’s Wage Tax dropped a few thousandths of a point, and the Property Tax/Rent Rebate income limit was indexed up to $48,110 for the rebates being paid this year.
The core figures
| Item | 2025 | 2026 | Note |
|---|---|---|---|
| Tax rate, every class of income, every filing status | 3.07% | 3.07% | Unchanged since 2004 |
| Starting point | Eight PA classes | Eight PA classes | Not federal AGI; a loss in one class never offsets another |
| Standard deduction, itemized deductions | None | None | The 3.07% runs from the first dollar |
| Personal or dependent exemption | None | None | Dependents raise the Tax Forgiveness limit instead |
| Filing threshold | $1 of tax | $1 of tax | About $33 of taxable income; file even if forgiveness wipes the tax out |
| Social Security, pensions and 401(k) after retirement, IRAs after 59½ | Not taxed | Not taxed | Contributions were taxed going in |
| Capital gains rate | 3.07% | 3.07% | No long-term preference; losses offset only gains, no carryforward |
| Local earned income tax | Yes | Yes | Separate return with the county collector; commonly 1% |
Tax Forgiveness (Schedule SP)
| Household | 100% forgiven at or below | Forgiveness ends above |
|---|---|---|
| Single, no children | $6,500 | $8,750 |
| Single, one child | $16,000 | $18,250 |
| Single, two children | $25,500 | $27,750 |
| Married, no children | $13,000 | $15,250 |
| Married, one child | $22,500 | $24,750 |
| Married, two children | $32,000 | $34,250 |
| Each additional dependent child | +$9,500 | +$9,500 |
Forgiveness steps down 10 percentage points for each $250 of eligibility income above the 100% line: $6,750 is 90% for a single filer, $7,000 is 80%, and so on to 10% at $8,750. Eligibility income is taxable income plus most nontaxable income, but it leaves out Social Security, retirement payments, unemployment and child support, which is why many retirees qualify.
The credits
| Credit | Figure | Refundable? | Where |
|---|---|---|---|
| Working Pennsylvanians Tax Credit | 10% of the federal EITC; maximum $805 for 2025, 2026 maximum to come | Yes | Figured by the Department from the attached federal 1040 |
| Child and Dependent Care Enhancement Credit | 100% of the federal credit at the 2022 percentages: maximum $1,050 one dependent / $2,100 two or more; minimum $600 / $1,200 with $3,000 of expenses per dependent | Yes | Schedule DC, with federal Form 2441 and Schedule 3 |
| Tax Forgiveness | 10% to 100% of the tax, by the table above | Credit against tax; withholding above the tax is refunded | Schedule SP |
| Resident credit for tax paid to another state | Lesser of the tax paid or 3.07% of the income; none for foreign taxes or other states’ cities | No | Schedule G-L, with the other state’s return |
| Restricted business credits (R&D, film, EITC/OSTC, employer 529 and child care matching, others) | Varies; awarded by program | No | Schedule OC |
| Child tax credit, renter credit, property tax credit, senior credit | None on the income tax return | Property tax relief is the separate PTRR program below |
The five deductions
| Deduction | Limit | Where |
|---|---|---|
| Unreimbursed employee business expenses | No cap, no 2% floor | Schedule UE, against compensation |
| HSA and Archer MSA contributions | Federal limits | PA-40 line 10 |
| 529 and PA ABLE contributions, per beneficiary per taxpayer | $19,000 for 2025; $19,000 for 2026 | Schedule O; tracks the federal gift exclusion, no carryforward |
| Student loan interest, per filer | $2,500 | Schedule O; began with 2025 returns |
| IRC 125 cafeteria-plan payments for health, disability and death benefits | Excluded from compensation | Already out of Box 16 |
Not deductible: 401(k) deferrals, traditional IRA contributions, alimony, educator expenses, QBI, bonus depreciation, personal interest, and the federal standard or itemized deductions. Tips, overtime and the federal senior deduction have no Pennsylvania counterpart.
Worked example: what the figures do to a married couple with two children
Both spouses work; W-2 Box 16 wages total $31,000, which is $2,000 of 401(k) deferrals higher than federal Box 1. They paid $1,200 of student loan interest and $7,000 for day care, and their federal EITC is about $7,100 at the lower income and $6,600 at the higher one (verify against 2026 federal tables). Compare their position at $31,000 and at $35,000 of Pennsylvania wages (federal AGI $29,000 and $33,000).
| Wages $31,000 | Wages $35,000 | |
|---|---|---|
| Student loan interest, Schedule O | −$1,200 | −$1,200 |
| Adjusted PA taxable income | $29,800 | $33,800 |
| Tax at 3.07% | $915 | $1,038 |
| Tax Forgiveness, married with two children | 100% (income under $32,000): −$915 | 0% (income over $34,250) |
| Child and dependent care credit, Schedule DC: 28% / 26% of $6,000 at the 2022 federal percentages | −$1,680 (refundable) | −$1,560 |
| Working Pennsylvanians credit, 10% of federal EITC | about −$710 | about −$660 |
| Net Pennsylvania position, before withholding | refund of about $2,390 | refund of about $1,180 |
Eligibility income for Tax Forgiveness is figured before the Schedule O deduction and includes some nontaxable items, so the test uses $31,000 and $35,000 here, not the adjusted figures. The $4,000 raise costs this family about $1,200 of Pennsylvania refund, most of it the forgiveness switching off between $32,000 and $34,250. The local earned income tax, at about 1%, is on top and has no forgiveness.
Estimated payments, penalties and payment rules
| Item | 2025 | 2026 | Note |
|---|---|---|---|
| Estimated payments required above this much income not subject to withholding | $11,000 | $14,000 | $430 of tax; $17,000 for 2027, $20,000 for 2028 |
| Safe harbor | 90% / 100% | 90% / 100% | 90% of each installment’s actual tax, or 100% of last year’s net taxable income × 3.07%; no 110% tier |
| Payments that must be made electronically | $15,000 and up | $15,000 and up | Paper payment penalty 3%, capped at $500 |
| Late filing penalty | 5% a month, 25% cap | 5% a month, 25% cap | Minimum $5 |
| Underpayment penalty, tax not paid with the return | 5% | 5% | Interest at the federal rate set each January 1 |
| Refund claim window | 3 years | 3 years | From the date the tax was paid; petition the Board of Appeals |
Dates
| Date | What |
|---|---|
| Friday, January 15, 2027 | Fourth 2026 estimated payment, PA-40 ES |
| Monday, March 1, 2027 | Farmers who skipped estimates file and pay in full |
| Thursday, April 15, 2027 | PA-40 and payment due; local earned income tax return due; first 2027 estimated payment; extension payment or REV-276 if tax is owed |
| Tuesday, June 15, 2027 and Wednesday, September 15, 2027 | Second and third 2027 estimated payments |
| Friday, October 15, 2027 | Extended due date; a federal extension carries over with no Pennsylvania form if no tax is due |
| Thursday, December 31, 2026 | Last day to apply for a 2025 Property Tax/Rent Rebate |
Beyond the income tax
| Item | 2026 |
|---|---|
| Property Tax/Rent Rebate, income limit | $48,110 for 2025 rebates applied for in 2026; limit for 2026 rebates to come (indexed under Act 7 of 2023) |
| Property Tax/Rent Rebate, standard rebate | $1,000 to $8,550 of income; $770 to $16,040; $460 to $19,240; $380 to $48,110; supplements of $190 to $500 for homeowners to $32,070 with taxes over 15% of income and for Philadelphia, Pittsburgh and Scranton |
| Inheritance tax | 0% spouse, charities, and a parent inheriting from a child 21 or younger; 4.5% children, grandchildren, parents; 12% siblings; 15% others. No exemption amount; 5% discount if paid within three months of death; no estate or gift tax |
| Sales tax | 6% state; 7% in Allegheny County; 8% in Philadelphia; most clothing, groceries and prescriptions exempt |
| Philadelphia Wage Tax, resident / nonresident | 3.74% / 3.43% through June 30, 2026; 3.735% / 3.425% from July 1, 2026 |
| Philadelphia School Income Tax | 3.74% for 2025; 2026 rate to come |
| Local Services Tax, annual maximum | $52, withheld by the work-location employer; exemption under $12,000 of earned income where the rate exceeds $10 |
| Reciprocal states for wages | Indiana, Maryland, New Jersey, Ohio, Virginia, West Virginia; file REV-419 with the employer |
| Corporate net income tax | 7.49%, falling to 4.99% by 2031 (context only) |
What changed from 2025
- Estimated-payment threshold, $11,000 to $14,000 of income not subject to withholding.
- Working Pennsylvanians Tax Credit, year two. The 2025 maximum was $805; the 2026 maximum, 10% of the 2026 federal EITC maximum, is to come.
- Philadelphia Wage Tax, down to 3.735% / 3.425% on July 1, 2026.
- Property Tax/Rent Rebate income limit, indexed to $48,110 for 2025 rebates.
- Payments of $15,000 or more must be electronic, under the 2026 estimated tax instructions.
- Nothing else. The rate, the Tax Forgiveness table, the care credit, the 529 limit (if the federal exclusion held at $19,000), the student loan deduction and the inheritance tax classes are all as they were. The federal law of 2025 changed nothing on the PA-40; see What’s new in Pennsylvania for 2026.
Behind the scenes: why nothing is indexed
Most states index something, and the federal government indexes nearly everything. Pennsylvania indexes almost nothing because there is almost nothing to index: no brackets, no exemption, no standard deduction. The one figure that behaves like an exemption, the Tax Forgiveness table, is set in statute in fixed dollars and has been raised only when the General Assembly votes to raise it. It has not voted in years, so inflation has quietly narrowed the group it helps. The two figures that do move each year, the 529 deduction limit and the Working Pennsylvanians credit maximum, move because they are tied to federal numbers the state does not control. The Property Tax/Rent Rebate limit moves because Act 7 of 2023 tied it to the cost of living, the first time Pennsylvania indexed anything for individuals.
What to bring
- Last year’s PA-40, for the 100% safe harbor and a line-by-line comparison
- All W-2s; Pennsylvania uses Box 16, which is often higher than Box 1
- The federal 1040 with Schedule EIC, for the Working Pennsylvanians credit
- Federal Form 2441 and Schedule 3, for Schedule DC
- Form 1098-E and 529 or PA ABLE contribution statements, for Schedule O
- Estimated payments made in 2026, with dates
- For the Property Tax/Rent Rebate: proof of age, income, and receipted property tax bills or a landlord rent certificate
Questions people ask
Is the Pennsylvania rate still 3.07%?
Yes, for 2026 and for every year since 2004. It is the same for wages, interest, dividends, business profit, gains, rents, trust income and gambling, and the same for every filing status.
What is the Pennsylvania standard deduction for 2026?
There is none, and there never has been. Pennsylvania has no standard deduction, no itemized deductions and no personal exemption. Low-income filers get Tax Forgiveness instead, and everyone gets the five narrow deductions in the table above.
How much is the Working Pennsylvanians Tax Credit?
Ten percent of your federal earned income credit, refundable. The 2025 cap was $805. The 2026 cap should be a little higher and had not been published as of this writing. The Department figures it from your federal 1040, which must be attached or uploaded.
Did the Tax Forgiveness income limits go up?
No. They are $6,500 single and $13,000 married for 100% forgiveness, plus $9,500 per dependent child, with forgiveness gone at $8,750 and $15,250 plus $9,500 per child. The same table has been in use for years and the Department shows it unchanged for the 2026 season.
Do I have to make estimated payments if I only have a small side business?
For 2026, not unless income with no withholding is expected to exceed $14,000, up from $11,000 last year. Pensions, IRAs and Social Security are not Pennsylvania income and do not count toward the line.
Is the 529 deduction still $19,000?
It was $19,000 per beneficiary per taxpayer for 2025, and it equals the federal gift-tax annual exclusion, which was expected to stay at $19,000 for 2026. Confirm before claiming it on a 2026 return.
One rate, no deduction, a table that never moves
Know where your household falls on the Tax Forgiveness table and whether your unwithheld income crosses $14,000, and most Pennsylvania arithmetic is done.
Written by Charles Trautman, EA, editor · Need to Know Tax, Lone Tree, Colorado
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Forms and official pages named in this article
- Form PA-40, Pennsylvania Income Tax Return (2025 form)
- Schedule SP, Tax Forgiveness, with the eligibility income tables
- Working Pennsylvanians Tax Credit
- Schedule DC, Child and Dependent Care Enhancement Tax Credit
- REV-413(I), 2026 estimated tax instructions (PA-40 ES)
- Form PA-1000, Property Tax/Rent Rebate
- Department of Revenue: personal income tax forms
Sources and where to check
- Department of Revenue: Tax Rates
- Department of Revenue: Tax Forgiveness eligibility income tables
- Department of Revenue: Child and Dependent Care Enhancement Tax Credit
- Department of Revenue: Working Pennsylvanians Tax Credit
- Department of Revenue: 2026 REV-413(I)
- PA Personal Income Tax Guide: Brief Overview and Filing Requirements (filing threshold, penalties, amended returns)
- Department of Revenue: DFO-02 Preparation Guide, What’s New for 2025
- Department of Revenue: Property Tax/Rent Rebate Program
- Department of Revenue: One Big Beautiful Bill Act guidance
- City of Philadelphia: Wage Tax rates
- City of Philadelphia: School Income Tax
- DCED: Act 32 local income tax, EIT rate and PSD code lookup