State retirement tax · Pennsylvania
Retirement tax rules for Pennsylvania residents (2026 guide)
Pennsylvania has a flat 3.07% income tax, but virtually all retirement income is exempt once you reach retirement age — so a typical retiree owes about $0. Here's what's exempt, what isn't, and how the numbers shake out.
Last reviewed July 17, 2026
Editorial review pending — see editorial process
Rate on retirement income
~0%*
Taxes Social Security?
No
Approx. tax on $90k retirement income
$0
Pension carve-outs
Full
*Effective rate on qualified retirement income (Social Security, pensions, 401(k)/IRA), which Pennsylvania exempts once you reach retirement age. The flat 3.07% rate still applies to non-retirement income — taxable brokerage gains, rental income, and wages.
Pennsylvania has a flat 3.07% state income tax — but for retirees that headline rate is misleading. Virtually all retirement income is exempt once you reach retirement age, so most retirees living on Social Security, a pension, and 401(k) or IRA withdrawals owe close to $0 in state income tax. The flat rate only reaches income that was never part of a retirement plan — taxable brokerage gains, rental income, wages, and non-qualified plans. That makes Pennsylvania one of the most retirement-income-friendly states in the country. Other retiree costs — property and sales taxes especially — vary widely by state, so weigh those separately.
What Pennsylvania taxes (and what it doesn’t)
Pennsylvania's 3.07% flat tax applies to your base income, but virtually all retirement income is exempt once you reach retirement age — so qualified retirement income passes through untaxed, and only income that was never part of a retirement plan is taxed at the flat rate. The two lists below spell out exactly what's exempt and what isn't.
Exempt (not taxed as retirement income)
- Social Security benefits
- Qualified pensions — private, government, military, and railroad retirement
- 401(k), 403(b), and governmental 457 plan distributions
- IRA and SEP distributions
Still taxed at the flat 3.07%
- Taxable brokerage interest, dividends, and capital gains
- Rental income
- Wages and self-employment or part-time work
- Non-qualified deferred compensation and similar non-retirement plans
State-specific note
Flat 3.07% income tax, but Pennsylvania does not tax retirement income once you reach retirement age — Social Security, qualified pensions, and 401(k)/403(b)/IRA distributions are all exempt. The 3.07% applies to wages, interest/dividends, capital gains, and rental income. Caveat: distributions taken BEFORE your plan's retirement age are taxed as compensation.
A worked example
Worked example. A Pennsylvania retiree with $30,000 of Social Security plus $60,000 of pension and 401(k)/IRA withdrawals owes $0 in Pennsylvania income tax — that retirement income is exempt once you reach retirement age. Now give that same retiree $20,000 of dividends and capital gains from a taxable brokerage account: that $20,000 was never retirement-plan income, so it's taxed at the flat 3.07% — on the order of $614/year before any standard deduction or lower-bracket exemption — while the $90,000 of retirement income stays untaxed.
Should you relocate?
For a retiree living mostly on Social Security, a pension, and 401(k)/IRA withdrawals, leaving Pennsylvania to cut state INCOME tax makes little sense — that income is already effectively untaxed here. If you're weighing a move for taxes, the numbers that actually differ are property and sales taxes (which vary widely by state), not the income-tax rate.
See how Pennsylvania state tax shapes your retirement plan
The calculator's Taxes tab models Pennsylvania the way the state actually does — qualified retirement income (SS, pensions, 401(k)/IRA) is treated as effectively untaxed. Run your specific numbers and see the year-by-year tax forecast.
Run my numbersFrequently asked
Does Pennsylvania tax my Social Security?
No. Pennsylvania fully exempts Social Security benefits — they're exempt once you reach retirement age along with the rest of your retirement income, so they never reach the 3.07% rate.
Does Pennsylvania tax 401(k), IRA, and pension withdrawals?
No — not qualified ones. Distributions from 401(k)/403(b)/457 plans, IRAs and SEPs, and qualified pensions (private, government, military, railroad) are exempt once you reach retirement age, so a retiree living on those sources typically owes about $0 in Pennsylvania income tax. See the state-specific note above for the exceptions — early distributions and non-qualified plans can be treated differently.
What's the effective state tax rate on my retirement income in Pennsylvania?
Effectively about 0%. Pennsylvania's flat 3.07% rate applies only to income that isn't exempt once you reach retirement age — taxable brokerage gains, rental income, wages, and non-qualified plans. Qualified retirement income is not taxed by the state.
Are Roth conversions taxed in Pennsylvania?
Generally no. A conversion from a traditional IRA or 401(k) to a Roth is a retirement-plan transaction, and Pennsylvania doesn't tax qualified retirement income — so the conversion is typically free of Pennsylvania income tax. Confirm the treatment if you convert before reaching retirement age. (You still owe federal tax on the conversion.)
Are pension benefits taxed differently in Pennsylvania?
Pennsylvania treats qualified pensions the same generous way as other retirement income: private, government, military, and railroad retirement are all exempt once you reach retirement age. There's no separate bracket or income limit for pensions — qualified pension income is simply not taxed by the state.
Does this apply to property tax too?
No — this page covers state INCOME tax only, and Pennsylvania's income-tax treatment of retirees is unusually favorable. Property and sales taxes are a separate question and vary widely by state; property tax in particular is set locally, so check your county assessor for your own number.
Primary sources
Pennsylvania-specific rules are sourced from the state revenue department's own publications (listed first); the rate table below is cross-checked against the national roundups. We re-verify annually.
Related reading
Alaska retirement tax rules
Retirement income is effectively state-tax-free in both.
Kentucky retirement tax rules
For perspective from a different tax tier.
Utah retirement tax rules
An example of a state that DOES tax Social Security.
Run my numbers
The calculator's Taxes tab uses the same per-state effective rate.
How the Monte Carlo actually works
2,000-word methodology page — covers state tax modelling.