Pennsylvania state income tax: engine rules, 2026

How the tax is computed

Every step the engine takes for Pennsylvania, in the order it takes them. Steps marked with a filing status or household type apply only there. Each step links the section below that carries Pennsylvania's figures and the official sources for it; the calculation order page describes every step for all jurisdictions.

What each filing status gets, read back from the engine for a household with $1 of income (so below every phase-out and income test):

1. Per-person mode joint returns with the spouse's age given On a joint return with the spouse's age given, every age test the state applies per taxpayer is evaluated for each spouse at their own age. Without it one household age applies to both.
   engine step (compute_state_tax_detail). Engine convention, no external source: The engine cannot know the second spouse's age unless told.
2. Blindness and disability, per person only when the caller says a person is blind or disabled The filer is person one; the spouse counts only on a joint return and only when the caller says so (there is no household convention as for age). Where a state lets a disabled person (and, where it says so, a blind one, or one whose spouse is disabled) qualify for its general retirement exclusion before the age, that person is treated as having reached the age for that exclusion only. Of the 42 taxing jurisdictions, these have a blind amount: Arizona, Arkansas, California, Colorado, Delaware, the District of Columbia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Jersey, New Mexico, North Dakota, Oklahoma, Oregon, Utah, Vermont and Virginia; these have none: Alabama, Connecticut, Georgia, Louisiana, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, West Virginia and Wisconsin. A disability route is calculated in Arkansas, the District of Columbia, Georgia, Hawaii, Idaho, Iowa, Maryland, Michigan, New Jersey, Oregon and West Virginia.
   engine step (compute_state_tax_detail). Engine convention, no external source: Who is blind or disabled is the caller's statement; the engine has no household convention for it.
3. Rate schedule and standard deduction by filing status Single uses the single schedule and deduction; married filing jointly the joint ones. Head of household and married filing separately follow the two steps below.
   Pennsylvania's values · engine step (select_brackets). Sources (Rate schedule): Personal Income Tax (checked 2026-10-12); 2025 Pennsylvania Personal Income Tax Return Instructions (PA-40 IN) (checked 2026-10-12)
4. Married filing separately Where the state publishes its own separate schedule, that one (with half the joint deduction unless a separate deduction is set). Where one schedule applies to every status, that schedule unscaled with the single deduction. Otherwise the joint schedule with every threshold and the deduction halved (computed as the joint tax on twice the income, halved).
   Pennsylvania's values · engine step (select_brackets). Sources (Rate schedule): Personal Income Tax (checked 2026-10-12); 2025 Pennsylvania Personal Income Tax Return Instructions (PA-40 IN) (checked 2026-10-12)
5. Head of household The state's head-of-household schedule where it has one, else the single schedule; the head-of-household deduction where set, else the single deduction.
   Pennsylvania's values · engine step (select_brackets). Sources (Rate schedule): Personal Income Tax (checked 2026-10-12); 2025 Pennsylvania Personal Income Tax Return Instructions (PA-40 IN) (checked 2026-10-12)
6. The income total every income test uses Other ordinary income + retirement distributions (before any exclusion) + conversion + federally taxable Social Security + long-term gains + Railroad Retirement Tier 2. It stands in for federal adjusted gross income in every threshold, cliff and phase-out below; state subtractions do not reduce it.
   engine step (compute_state_tax_detail). Engine convention, no external source: The inputs are the federal AGI components, so their sum is federal AGI for these income types.
7. Attributing income to each spouse joint returns with each spouse's own amounts given With a caller's split (the API's spouse object), each spouse's own distributions (employer-plan money included), pension, public pension, conversion, wages and military pay; spouse 2's shares are clamped into the household totals and spouse 1 gets the rest. Without a split, in per-person mode, every item is divided 50/50. Social Security is divided by each spouse's own gross benefits where the caller gives spouse.socialSecurityGross, else 50/50; other ordinary income and gains are always divided 50/50 where a rule needs a per-person amount. The split is used only where a state's rule is per taxpayer; household totals stay authoritative for the base and the income tests.
   engine step (compute_state_tax_detail). Engine convention, no external source: Equal attribution is the neutral split when the owner of a dollar is not known.
8. Early IRA distributions The IRA and employer-plan dollars each person took before 59½: the amount the caller gave, else every such dollar of a person under 59 at the end of the year (none of an older person, or when the age is not given). Where the state keeps its retirement break only for some federal early-withdrawal exceptions, the other early dollars leave the retirement pool and are taxed as ordinary income; the exception is the caller's, else death for a survivor's benefits, disability for a disabled person, else none. Where the state taxes only the part over the IRA basis, the part within it is left out altogether. A kept exception passes the state's IRA age gate. The additional state tax on the early dollars with no exception is added before the credits, or after them where the state says so (next steps).
   Pennsylvania's values · engine step (compute_state_tax_detail). Sources (IRA, 401(k) and private pensions): 2025 Pennsylvania Personal Income Tax Return Instructions (PA-40 IN) (checked 2026-10-12); Pennsylvania Department of Revenue: 2025_pa-40sp.pdf (checked 2026-10-12)
9. Keeping the per-spouse shares inside the household joint returns with each spouse's own amounts given After the public-pension and employer-pension carve-outs, if the two spouses' remaining shares add up to more than the household's exclusion-eligible distributions (an inconsistent split), spouse 1's share is reduced so they do not.
   engine step (compute_state_tax_detail). Engine convention, no external source: Input normalisation.
10. Military retirement pay The state's military rule runs first, on military pay alone, per taxpayer: each spouse's own pay at their own age when attributed, otherwise half each at the household age on a joint return. Exempt dollars leave the base; the rest become pension dollars for the general retirement rules. Where the state lets a disabled retiree qualify at any age, a disabled person is treated as having reached the rule's age.
    Pennsylvania's values · engine step (compute_state_tax_detail). Sources (Military retirement pay): Gross compensation (checked 2026-10-12)
11. One taxpayer's military exemption Exempt: all of it (below the age split, up to the younger cap). Capped: up to the cap for the age tier, plus the earned-income bonus below the age split when the taxpayer's own wages exceed the threshold, less the taxpayer's own Social Security where the rule says so. Percentage: the percentage (below the age split, up to the younger cap). Then the income limit: above it the exemption is lost, or phased out over the range where one is set.
    Pennsylvania's values · engine step (military_exempt_one). Sources (Military retirement pay): Gross compensation (checked 2026-10-12)
12. Social Security exempt None of the federally taxable benefit enters the base.
    Pennsylvania's values · engine step (ss_amount_in_state_base). Sources (Social Security): 2025 Pennsylvania Personal Income Tax Return Instructions (PA-40 IN) (checked 2026-10-12)
13. Retirement exclusion per spouse (both ages known) joint returns with the spouse's age given Full-exclusion states exclude each qualifying spouse's own dollars. Capped states give each spouse the single cap for their own age against their own eligible dollars (pension dollars only where the exclusion is pension-only; employer dollars only below the IRA age), less their military exclusion and their own Social Security offset (by the spouse's stated gross benefits, else half). Per-return states (and the pooled-if-both-qualify rule when both qualify) apply the joint cap to the couple's pooled eligible dollars when either spouse qualifies. The income tests then apply once to the summed deduction.
    Pennsylvania's values · engine step (compute_state_tax_detail). Sources (IRA, 401(k) and private pensions): 2025 Pennsylvania Personal Income Tax Return Instructions (PA-40 IN) (checked 2026-10-12); Pennsylvania Department of Revenue: 2025_pa-40sp.pdf (checked 2026-10-12)
14. Retirement exclusion (household) The distributions eligible for the exclusion go through the exclusion below. Taxable public-pension dollars left by a cap are not eligible; below the IRA age only employer-plan dollars are.
    Pennsylvania's values · engine step (compute_state_tax_detail). Sources (IRA, 401(k) and private pensions): 2025 Pennsylvania Personal Income Tax Return Instructions (PA-40 IN) (checked 2026-10-12); Pennsylvania Department of Revenue: 2025_pa-40sp.pdf (checked 2026-10-12)
15. Conversion taxed or exempt In full-exclusion states a conversion is exempt at the qualifying age (at any age where the state says so). Elsewhere, unless pooled above, it is ordinary income taxed in full.
    Pennsylvania's values · engine step (compute_state_tax_detail). Sources (Roth conversions): 2025 Pennsylvania Personal Income Tax Return Instructions (PA-40 IN) (checked 2026-10-12)
16. Full exclusion All distributions are excluded at or above the exclusion age; below it they are taxed.
    Pennsylvania's values · engine step (retirement_distributions_in_state_base). Sources (IRA, 401(k) and private pensions): 2025 Pennsylvania Personal Income Tax Return Instructions (PA-40 IN) (checked 2026-10-12); Pennsylvania Department of Revenue: 2025_pa-40sp.pdf (checked 2026-10-12)
17. Long-term gains in the base Where gains are taxed as ordinary income: net long-term gain less the flat exclusion (never below zero), times the inclusion share. Elsewhere none enters.
    Pennsylvania's values · engine step (compute_state_tax_detail). Sources (Capital gains): Personal Income Tax (checked 2026-10-12); 2025 Pennsylvania Personal Income Tax Return Instructions (PA-40 IN) (checked 2026-10-12); 2025 PA-40 Instructions (checked 2026-10-12)
18. State taxable income Other ordinary income + Social Security, retirement income, conversion and gains left in the base − standard deduction − personal exemption − age subtractions.
    engine step (compute_state_tax_detail). Engine convention, no external source: The order of subtraction follows the state forms; each amount is sourced at its own step.
19. No tax at or below zero State taxable income at or below zero returns a tax of 0 (credits are not refundable), unless the state has a tax computed apart from taxable income that still applies (next step).
    engine step (compute_state_tax_detail). Engine convention, no external source: Every credit the engine carries is nonrefundable, so nothing below can make a zero tax negative; each credit is sourced at its own step.
20. Separate-return scaling married filing separately For the halved-joint rule, taxable income is doubled before the schedule and the result halved.
    Pennsylvania's values · engine step (compute_state_tax_detail). Sources (Rate schedule): Personal Income Tax (checked 2026-10-12); 2025 Pennsylvania Personal Income Tax Return Instructions (PA-40 IN) (checked 2026-10-12)
21. The rate schedule Each bracket's rate on the part of taxable income inside it, summed. No rounding: the result is carried in full precision.
    Pennsylvania's values · engine step (apply_state_brackets). Sources (Rate schedule): Personal Income Tax (checked 2026-10-12); 2025 Pennsylvania Personal Income Tax Return Instructions (PA-40 IN) (checked 2026-10-12)
22. Tax forgiveness Eligibility income (the state's taxable income; twice the filer's own on a separate return, since the table uses joint income) at or below the base forgives the whole tax after the other credits; each step (or part) above it forgives the step share less. Each dependent child (a dependent under 19, a full-time student under 24, or a disabled dependent) raises the base by the per-dependent amount.
    Pennsylvania's values · engine step (compute_state_tax_detail). Sources (Deductions, exemptions and credits): Personal Income Tax (checked 2026-10-12); 2025 Pennsylvania Personal Income Tax Return Instructions (PA-40 IN) (checked 2026-10-12); 2025 PA-40 Instructions (checked 2026-10-12)
23. Credits cannot make the tax negative The credits are subtracted and the result floored at zero.
    engine step (compute_state_tax_detail). Engine convention, no external source: Every credit the engine carries is nonrefundable; each credit is sourced at its own step.
24. Qualifying surviving spouse qualifying surviving spouse returns A qualifying surviving spouse (filingStatus qss) is one person on the return, taxed from the single figures with the state's own treatment of the status laid over them: where the state says so, the joint rate schedule, the joint standard deduction, the joint personal exemption, the joint income limits and phase-outs (only those the state sets for joint returns), the married 65+ and blindness amounts, or the head-of-household return; where the state gives the status nothing of its own, the single return. The federal figures the engine derives for the status are the federal qualifying-surviving-spouse ones (the joint standard deduction, the married 65+ amount).
    Pennsylvania's values · engine step (state_tax_effective_config). Sources (Rate schedule): Personal Income Tax (checked 2026-10-12); 2025 Pennsylvania Personal Income Tax Return Instructions (PA-40 IN) (checked 2026-10-12)
25. Railroad Retirement benefits only when the caller gives Railroad Retirement benefits Railroad Retirement benefits are never taxed by a state (45 U.S.C. §231m). Tier 2 (railroadRetirementTier2) is in the income total the tests use but never in the base. Tier 1 (railroadRetirementTier1) is a part of the gross benefits (socialSecurityGross); its share of the taxable benefits is taken out of the Social Security every state rule sees, so a state that taxes Social Security never reaches it. Where a state's worksheet says so, the benefits reduce a retirement cap or subtraction (ID, IN, MD, ME, MN: both tiers; MI: the taxable railroad benefits); Minnesota's and Utah's Social Security rules test an income without them, Minnesota's, New Jersey's and California's retirement income tests an income without Tier 2; Ohio and Delaware test their own AGI everywhere, which never holds the benefits.
    Pennsylvania's values · engine step (compute_state_tax_detail). Sources (Social Security): 2025 Pennsylvania Personal Income Tax Return Instructions (PA-40 IN) (checked 2026-10-12)
26. Each spouse's own Social Security joint returns On a joint return, each spouse's own Social Security is the spouse's share of the benefits by spouse.socialSecurityGross when the caller gives it (Tier 1 railroad benefits left out), else half each. It is what the per-spouse rules read: Colorado's per-spouse subtraction, Rhode Island's per-spouse modification, and the Maine, Maryland and other retirement caps reduced by the benefits each spouse received (with each spouse's own railroad benefits where the state counts them).
    Pennsylvania's values · engine step (compute_state_tax_detail). Sources (Social Security): 2025 Pennsylvania Personal Income Tax Return Instructions (PA-40 IN) (checked 2026-10-12)
27. Refundable state credits The credits paid beyond the tax (reported in refundableCredits; netTax = totalTax less them): earned income credits as a share of the federal EIC with each state's own age band (OK on the 2020 federal credit, DC's own childless schedule, the CalEITC table, MN's Working Family Credit), the NYC EIC and school tax credits, and the property-tax, renter, grocery and senior credits of MA, MI, NJ, ID, HI, NM, OK, AZ, NY, RI, WV, ME, DC, MN, MO, WI, IN and MT, each on its own income measure. Engine 1.13.1: a part-year NYC resident's school tax credits (the Table 2 proration chart and the rate-reduction amount on IT-360.1 line 47; IT-203 lines 60 / 60a for a part-year state resident).
    Pennsylvania's values · engine step (state_tax_refundable_credits). Sources (Deductions, exemptions and credits): Personal Income Tax (checked 2026-10-12); 2025 Pennsylvania Personal Income Tax Return Instructions (PA-40 IN) (checked 2026-10-12); 2025 PA-40 Instructions (checked 2026-10-12)

Worked examples

Computed by the engine for the fixed households below (the same ones for every state, so states compare directly). Federal tax is not supplied, so a federal-tax deduction is not taken; the income tests use the sum of the components as income.

Line by line

The intermediate lines the engine records while it computes each example (its detail record, printed as it comes out; lines that are zero are left out). The engine's documentation build checks that the lines add up to the taxable income and the tax, for every state, filing status and a grid of households. Each line links the engine step that produces it.

After 2026: how the amounts move

A request with projection (API) estimates a later tax year from these rules: every dollar amount and age test below moves the way Pennsylvania's law moves it. Rates and the rules themselves stay the 2026 ones (how projection works).

Enacted for later years, not applied by the projection

None found: the research found no change enacted for years after 2026 beyond the schedules above.

What the engine does not calculate, and known approximations

• An early IRA distribution is taxed above the iraBasis given (cost recovery), with none when iraBasis is not given, the conservative reading (engine 1.7.0).
• Schedule SP Tax Forgiveness takes eligibility income as PA taxable income (nontaxable interest, gifts and the other Section III additions are not inputs), and for married filing separately assumes the spouse's eligibility income equals the filer's. Each dependent child (under 19, a student under 24, or disabled) adds $9,500 to the eligibility limit (engine 1.7.0).
• A dependent aged 19 or over who is neither a student nor disabled is not counted as a Schedule SP dependent child: the dependents input does not say whether a dependent is the filer's child, and the schedule counts any child claimed as a dependent, adult children included. Sources: Personal Income Tax (checked 2026-10-12); 2025 Pennsylvania Personal Income Tax Return Instructions (PA-40 IN) (checked 2026-10-12); 2025 PA-40 Instructions (checked 2026-10-12).
• The part of a Roth conversion that federal tax was withheld from and that was not redeposited is taxable in Pennsylvania (above the IRA basis); federal tax withheld from a Roth conversion and not redeposited is not calculated: the engine treats the whole conversion as nontaxable. Sources: 2025 Pennsylvania Personal Income Tax Return Instructions (PA-40 IN) (checked 2026-10-12).
• Philadelphia's income-based Wage Tax rate (a reduced rate for residents eligible for Pennsylvania tax forgiveness, claimed by refund petition) is not applied; 2026 wages are taxed at the average of the rates before and after July 1. Sources: Local Tax Enabling Act, Act of Dec. 31, 1965, P.L. 1257, No. 511, Cl. 53 (as amended incl. Act 32 of 2008) - unofficial purdon-style compilation PDF from palegis.us (Wayback copy captured 2026-09-27; palegis.us unreachable directly) (checked 2026-10-01); CLGS-32-1 (04/2024) Taxpayer Annual Local Earned Income Tax Return and instructions (checked 2026-10-12); Wage Tax (employers) (checked 2026-10-12); Earnings Tax (employees) (checked 2026-10-12); Tax Rate History - City of Philadelphia and School District of Philadelphia (Revised June 11, 2026) (checked 2026-10-12); CLGS-32-1 Taxpayer Annual Local Earned Income Tax Return (rev. 04-2024) (checked 2026-10-06); School Income Tax (SIT) Regulations (checked 2026-10-06); Tax Rate Schedule (Wage Tax and Earnings Tax, resident and non-resident rates) (checked 2026-10-06); City of Philadelphia Income Tax Regulations (compiled January 2020) (checked 2026-10-12); Annual Reconciliation of 2025 Employee Earnings Tax (return) (checked 2026-10-12); 2025 Wage Tax Refund Petition - Salary/Hourly Employees, form and instructions (checked 2026-10-12); General information for 2025 School Income Tax (SIT) (checked 2026-10-12); 2025 Net Profits Tax return (checked 2026-10-12).
• Married couples whose residency differs (engine 1.13.0): when both spouses are part-year residents with different resident periods, the joint return is not calculated: Pennsylvania's joint return of two part-year residents uses one elected residency period (the earliest start to the latest end), so each spouse's income in that common period, which the request does not carry. Sources: 2025 Pennsylvania Personal Income Tax Return Instructions (PA-40 IN) (checked 2026-10-12); 2025 Pennsylvania Personal Income Tax Return Instructions (PA-40 IN) (checked 2026-10-06).

What the engine does not calculate for any state (itemized deductions, credits beyond those listed, part-year residents, and more) is listed on the calculation order page.

Verification

Worksheet-tested Scenarios replay the 2025 PA-40 (lines 1a, 5, 9, 11, 12), its IRA, pension and Social Security instructions and Schedule SP; tests/test_state_worksheets_3.c.

• Golden scenarios (hand-computed expected tax, asserted to within $1): S16, GPA-LTCG1.
• State-specific unit tests: test_ss_exempt_states_dont_tax_ss, test_full_exclusion_states_exempt_pension_and_ira, test_full_exclusion_states_also_exempt_roth_conversion, test_v3_folds_v2, test_localities_endpoint, test_pa_nj_no_offset, test_prop_l3_1140, test_absent_is_unchanged, test_pa_nj_nothing, test_rules_match_research, test_applied, test_pa_early_distributions, test_prop_l3, test_s_states, test_engine_paths, test_pa_tax_forgiveness.
• Structural tests covering every state: 8.
• State forms and worksheets followed in the test derivations: PA-40 lines 1a, 5, 9, 11, 12 (3.07% of adjusted PA taxable income); PA-40 instructions: IRA, eligible-plan pension, military and Roth-conversion treatment; PA-40 Schedule SP Eligibility Income Tables 1 and 2 (100%, 70% and cliff-edge rows).