Taxation in Pennsylvania

Updated on Monday 07th January 2019

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The state of Pennsylvania imposes no privilege tax, however, business persons should pay attention to the corporate income tax applicable to incomes. It is good to know that, since 2016, Pennsylvania has no franchise tax, but for complete information about the taxation regime in this state, you should get in touch with our team of company formation consultants in USA. They can also handle the registration process of a company in USA.

What is the corporate net income tax rate in Pennsylvania?

A flat tax of 9.99% represents the corporate net income tax in Pennsylvania, one of the highest taxes in USA. One should know that limited liability companies are seen as pass-through entities for which the taxation is made on the personal incomes of each member. In Pennsylvania, 3.07% represents the flat tax for the personal income registered in this state.

Taxes for S corporations in Pennsylvania

S corporations in Pennsylvania are subject to a taxable income on each shareholder meaning that they are considered pass-through entities where the stockholder will have to pay the amount of taxes on his/her share of the firms’ income. In other words, S corporations in Pennsylvania do not need to pay the corporate income tax, but each individual will have to pay the taxes that are imposed for the share of the company’s income, and that is the tax rate of 3.07%. The same thing is available for limited liability companies in Pennsylvania, except for the case in which they are classified as traditional corporations.

The personal income tax in Pennsylvania

The following categories of personal incomes are levied at a flat tax rate of 3.07%:
  • dividends, interests, net gains from rents, copyrights in Pennsylvania;
  • patents or royalties, incomes derived from trusts or through estates;
  • incomes derived from property dispositions in Pennsylvania;
  • gambling and lottery earnings in the state of Pennsylvania;
  • compensations.
You may solicit complete support and information about the taxes you need to pay in Pennsylvania from our team of consultants. Also, we invite you to read the general guide to company incorporation in Pennsylvania and find out how you can start a business in USA with fewer formalities and complete assistance from our team.

What is the sales tax in Pennsylvania?

The standard sales tax in Pennsylvania is set at 6% rate and it is imposed on products and services available for sale purposes in the state. It is good to know that a tax rate of 2% is applicable by vendors in Philadelphia and it represents a local tax imposed for sales and services except for food products, clothing and medicines.

Is there a property tax in Pennsylvania?

No, there is no tax collected on real estate properties in Pennsylvania. However, such taxes are reserved for municipalities, schools, and counties in this state.

The inheritance tax in Pennsylvania 

Compared to other American states, Pennsylvania has an inheritance tax which does not exceed 15%. In the case of inherited property from a family member to another family member, there is no inheritance tax imposed. The good news is that there is no estate tax imposed in Pennsylvania. Please solicit complete information about the taxes you need to pay in Pennsylvania from our team of company formation specialists in USA. They can also help you open a company in USA, in any chosen state. 

Other tax facts in Pennsylvania

The Department of Revenue in Pennsylvania allows each taxpayer to introduce the company’s details and find out information about the taxes he/she need to pay. It is good to know that, if your business runs in other states too, you are subject to multistate business and nexus. This means that, besides the taxes imposed in Pennsylvania, you should pay the ones in the states you have registered other businesses. The realty transfer tax is 1% rate applicable to real estate transferred by long-term lease or deeds. If you would like to open a restaurant in Pennsylvania and sell alcoholic beverages, the liquor tax is set at an 18% rate. Besides that, you might want to pay attention to the fuel and the cigarette tax rates in Pennsylvania.
We mention that you can also request accounting services for your company in USA and find out how we can manage such matters with the help of a professional team of accountants. Most of the companies in USA decide for externalized accounting services instead of creating a department for such matters.
We kindly invite you to get in touch with our team of company formation representatives in USA and solicit comprehensive information about the taxation structure for your company in Pennsylvania.