Pennsylvania retirement taxes at a glance (2026)
| State income tax | Flat 3.07%Pennsylvania has a flat 3.07% income tax. Many municipalities add a local earned income tax, which does not apply to retirement income. |
|---|---|
| Social Security | Not taxedPennsylvania does not tax Social Security benefits. |
| Pensions | Not taxedPensions from eligible employer plans are not taxed when paid after retirement. Early distributions before retirement age can be taxed as compensation. |
| 401(k) and IRA withdrawals | Not taxedIRA and 401(k) withdrawals taken after age 59½ (or after retirement from an eligible plan) are not taxed. Early withdrawals can be taxed at 3.07%. |
| Government pensions | Not taxedGovernment pensions such as PSERS and SERS are not taxed once the retiree reaches retirement age. |
| Military retirement pay | Not taxedMilitary retirement pay is not taxed. |
| Estate tax | No |
| Inheritance tax | YesPennsylvania taxes inheritances at 0% for spouses (and parents inheriting from a child 21 or younger), 4.5% for direct descendants, 12% for siblings, and 15% for other heirs. |
| Property tax help for seniors | The Property Tax/Rent Rebate Program pays $380 to $1,000 to people 65+, widows and widowers 50+, and disabled adults with income up to $48,110 (higher rebates in Philadelphia, Pittsburgh, and Scranton). |
| Sales tax | State sales tax is 6%, plus 1% in Allegheny County and 2% in Philadelphia. |
Recent changes and good to know
- AARP's page says non-military pensions are taxed; this conflicts with Pennsylvania law and other sources, which exempt eligible pensions paid after retirement. The field follows the other sources.
- No 2025-2026 changes to retirement income treatment were found.
How to lower your retirement taxes in Pennsylvania
- Mix your income sources. Roth IRA withdrawals are tax-free at the federal level and generally in Pennsylvania too, so a Roth conversion before retirement can cut state tax later. Try the Roth conversion calculator.
- Watch federal Medicare costs. Large IRA withdrawals can raise your Medicare premiums. Check the 2026 IRMAA brackets.
- Think about your heirs. See what your IRA will really cost your family with the Family Tax Rate calculator.
- Comparing states? These have no state income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming.
Frequently asked questions
Does Pennsylvania tax retirement income?
No, for most retirees. Pennsylvania does not tax Social Security, pensions, or retirement account withdrawals taken after retirement age.
Does Pennsylvania tax Social Security?
Pennsylvania does not tax Social Security benefits.
Does Pennsylvania tax pensions?
Pensions from eligible employer plans are not taxed when paid after retirement. Early distributions before retirement age can be taxed as compensation.
Does Pennsylvania tax 401(k) and IRA withdrawals?
IRA and 401(k) withdrawals taken after age 59½ (or after retirement from an eligible plan) are not taxed. Early withdrawals can be taxed at 3.07%.
Does Pennsylvania tax military retirement pay?
Military retirement pay is not taxed.
Does Pennsylvania have an estate or inheritance tax?
Pennsylvania taxes inheritances at 0% for spouses (and parents inheriting from a child 21 or younger), 4.5% for direct descendants, 12% for siblings, and 15% for other heirs.
Sources (last verified 2026)
- Pennsylvania State Taxes: 2026 Facts — AARP (2026-03-24)
- Pennsylvania Retirement Income: What's Taxable? — Sauder & Stoltzfus (2026-02-21)
- PA Department of Revenue answers: retirement before 59.5 — Pennsylvania Department of Revenue (2026-09-24)
- State Individual Income Tax Rates and Brackets, 2026 — Tax Foundation (2026-02-17)
Educational content only, not tax, legal or investment advice. Plans and tax laws change; confirm details with your employer's plan documents or your state revenue department. Smart Financial Lifestyle is not affiliated with any employer named on this site.