State retirement tax · Pennsylvania
Retirement tax rules for Pennsylvania residents (2026 guide)
Pennsylvania's 3.07% flat income tax skips retirement income entirely once you've reached retirement age: Social Security, pensions, 401(k) and IRA withdrawals are all exempt. What it still taxes is interest, dividends, capital gains and early withdrawals, and its property tax/rent rebate helps lower-income seniors.
By Mindaugas Laucius · Last reviewed October 21, 2026
Rate on retirement income
~0%*
Taxes Social Security?
No
Approx. tax on $90k retirement income
$0
Pension carve-outs
Full
Quick figures: a single filer with $90,000 of income, $30,000 of it Social Security.
Retirement income is exempt — with one catch
Pennsylvania treats payments from an employer pension or retirement plan as exempt once you meet the plan's retirement conditions (age or years of service), and IRA distributions after 59½. Social Security is never taxed. The catch is timing: money taken before you meet those conditions is taxed as compensation at 3.07%.
Local earned income taxes, which most municipalities levy, apply to wages, not to retirement income.
What's still taxed
Interest, dividends, capital gains from taxable brokerage accounts, rental income and any wages are taxed at the flat 3.07%. Pennsylvania doesn't allow a standard deduction, so the rate applies from the first dollar.
Property tax/rent rebate
Homeowners and renters 65+ (or widows/widowers 50+, or disabled) with household income of $48,110 or less can get up to $1,000 back, and only half of Social Security counts as income for the test.
Source: Pennsylvania DOR — Property Tax/Rent Rebate Program ↗
Worked examples
A typical retiree
- $45,000 of pension + $25,000 of IRA withdrawals at 67 + $30,000 of Social Security.
Pennsylvania income tax: $0.
Brokerage income
- $20,000 of dividends and capital gains × 3.07% = $614.
$614 — investment income is taxed even in retirement.
An early IRA withdrawal
- $30,000 taken from an IRA at 57 × 3.07% = $921.
$921 that waiting until 59½ would have avoided.
Run your own numbers — pick Pennsylvania in the calculator’s Taxes tab for a year-by-year estimate. Or compare all 50 states and DC.
Thinking about a move? The free state-to-state retirement tax comparison puts Pennsylvania next to any other state on your own income.
Pennsylvania questions
Does Pennsylvania tax Roth conversions?
Generally not once you're past 59½; conversions before then can be taxable. Check the PA Personal Income Tax Guide for your situation.
Do Pennsylvania localities tax pensions?
No. Local earned income taxes apply to wages and self-employment income, not retirement benefits.
Is the rebate income limit before or after Social Security?
Half of your Social Security is excluded when you calculate household income for the rebate.