Retiring in Pennsylvania

Every figure below is sourced to Pennsylvania’s own publications and dated. Estimates only, and not tax advice.

Retirement tax by state

What your state actually takes from a 401(k) withdrawal, a pension, and Social Security — in dollars, not a yes/no list.

Brokerage account growth

Long-term index-fund growth after expense-ratio drag — and what your state takes from the gains at withdrawal.

Roth vs. Traditional

Decided on the two rates that actually govern it — yours now, and yours at withdrawal, in the state you'll retire in rather than the one you're in.

Contribution limit optimizer

2026 limits, employer match, the 60-63 super catch-up, and whether the Roth catch-up mandate applies to you.

Required minimum distribution

When your RMDs start under SECURE 2.0, how much this year's is, and what missing it costs.

Backdoor Roth pro-rata

What a backdoor Roth conversion would actually cost you in tax — the pro-rata rule most calculators only describe.

Self-directed IRA real estate (UDFI)

The tax a leveraged rental owes inside a self-directed IRA — computed at trust rates, not the rate you'd assume.

Pennsylvania at a glance

401(k) and IRA withdrawals
Not taxed
From age 59.5.
Social Security
Not taxed
Top marginal rate
3.07%
A flat rate on all taxable income.
Tax year
2026
Brackets are legislated and change on a fixed calendar, so the year matters.
  • Pennsylvania is the most retiree-friendly income tax state that still has an income tax: Social Security, pensions of every kind, and post-retirement 401(k) and IRA distributions are all untaxed, with no dollar cap and no income limit, and the local Earned Income Tax generally does not reach retirement income either.
  • The flip side is that Pennsylvania taxes working-age income hard relative to its rate: employee CONTRIBUTIONS to a retirement plan are always taxable compensation for Pennsylvania purposes, so a 401(k) deferral gets no state deduction on the way in. Pennsylvania taxes the contribution and exempts the distribution — the mirror image of the federal treatment.
  • DELIBERATE OMISSION: autoIraProgram is not populated. Pennsylvania has no live state-facilitated auto-IRA employer mandate of the kind New York, Oregon, Rhode Island and Illinois operate; proposals have been introduced but no operating mandate was confirmable from a primary source.

Local income tax applies in parts of Pennsylvania

PENNSYLVANIA'S LOCAL EARNED INCOME TAX IS NOT A ROUNDING ERROR — outside Philadelphia the ordinary combined municipal-plus-school-district EIT is about 1% and in some places substantially more, which on a 3.07% state rate is a third again on top. Nearly every Pennsylvania municipality and school district outside Philadelphia levies an Earned Income Tax under Act 32, collected by county-level tax collection districts; the rate is the sum of the municipality's share and the school district's share, and the 1% example above is the common floor rather than a statewide figure. PHILADELPHIA IS DIFFERENT IN KIND, not just in degree: it is outside the Act 32 system and levies the Wage Tax at 3.735% on residents (wherever they work) and 3.425% on non-residents for work performed in the city, both effective July 1, 2026. Philadelphia residents with unearned income also owe the separate School Income Tax. THE THING THAT MOST OFTEN GOES WRONG: Pennsylvania local taxes are on EARNED income. Pensions, Social Security, 401(k) and IRA distributions, interest and dividends are generally NOT subject to the local EIT or the Philadelphia Wage Tax, so a Pennsylvania retiree's local burden collapses to roughly zero while a Pennsylvania worker's is real. NO SINGLE STATEWIDE LOCAL RATE IS RECORDED, deliberately: rates are set municipality by municipality and school district by school district, and picking one would fabricate a figure for everyone living elsewhere.