PA
Pennsylvania Small Business Tax Guide
Pennsylvania's income, sales and corporate rates as the Department of Revenue lists them, plus federal points from the IRS. General information, not tax advice.
Disclaimer: This page is educational content only. Tax laws change, and your situation may differ. It is not legal, tax, or financial advice. Consult a qualified professional licensed in Pennsylvania before making filing or planning decisions.
Tax landscape for small businesses
Pennsylvania rates below are taken word for word from the state's revenue department, federal points from the IRS, and each quote is tagged with its page and its date.
The Department of Revenue's tax rates table (Pennsylvania, checked October 31, 2026) lists Personal Income Tax at "3.07 percent" and PA Sales, Use and Hotel Occupancy Tax at "6 percent". Its Local Sales Tax row reads "1 percent for Allegheny County" and "2 percent for Philadelphia".
For corporations, the same table (Pennsylvania, checked October 31, 2026) lists Corporate Net Income Tax at "7.49 percent" for "January 1, 2026 through December 31, 2026" and "6.99 percent" for "January 1, 2027 through December 31, 2027". For Capital Stock/Foreign Franchise Tax it says "Eliminated for tax years beginning Jan. 1, 2016 and after."
Worked example at the 6 percent state rate from that table (Pennsylvania, checked October 31, 2026), using sample figures: $850.00 of taxable sales carries $850.00 × 6% = $51.00 of state sales tax, so the invoice totals $901.00 outside Allegheny County and Philadelphia, where the table lists a local rate on top. Use your own figures; these are only an illustration.
Tax overview
Each row lists a tax area and its notes. Confirm current figures with your state's tax agency or the IRS.
| Tax type | Rate or basis | Notes |
|---|---|---|
| Personal income tax | "3.07 percent" | Department of Revenue tax rates table (Pennsylvania, checked October 31, 2026), Personal Income Tax row. No tax year is shown next to this rate. |
| Sales, use and hotel occupancy tax | "6 percent" | Same table (Pennsylvania, checked October 31, 2026). Local Sales Tax row: "1 percent for Allegheny County" and "2 percent for Philadelphia". No tax year is shown next to this rate, here or on the department's sales tax page. |
| Corporate net income tax, 2026 | "7.49 percent" | Same table (Pennsylvania, checked October 31, 2026), for "January 1, 2026 through December 31, 2026". |
| Capital stock/foreign franchise tax | "Eliminated" | Same table (Pennsylvania, checked October 31, 2026): "Eliminated for tax years beginning Jan. 1, 2016 and after." |
| Federal self-employment tax | "15.3%" | IRS self-employment tax page (In the US (federal), last reviewed or updated October 30, 2026): "The self-employment tax rate is 15.3%." |
Filing requirements
This list isn't a complete checklist for your business.
Who files a PA-40
The Department of Revenue's personal income tax guide (Pennsylvania, checked October 31, 2026) says "Every resident, part-year resident or nonresident individual must file a Pennsylvania Income Tax Return (PA-40) when he or she realizes income generating $1 or more in tax, even if no tax is due".
PA-40 due date
The same guide (Pennsylvania, checked October 31, 2026) says "The Pennsylvania Department of Revenue follows the Internal Revenue Service (IRS) due date for filing returns." and "You must file before midnight, April 15 or the next business day if April 15 falls on a Saturday, Sunday or IRS recognized holiday."
Pennsylvania estimated payments
The guide's estimated payments section (Pennsylvania, checked October 31, 2026) says taxpayers "are required to make installment payments of estimated tax if Pennsylvania taxable income not subject to employer withholding is reasonably expected to exceed $9,500 ($292 in tax) for the taxable year."
Sales tax license
The Department of Revenue's sales, use and hotel occupancy tax page (Pennsylvania, checked November 1, 2026) says the Sales, Use, and Hotel Occupancy Retail Tax License is "Required for any business that sells taxable items or performs taxable services." It adds "Returns are to be filed whether or not taxable transactions occur in a period."
Sellers outside Pennsylvania
The department's online retailers page (Pennsylvania, checked November 1, 2026) says "effective July 1, 2019, vendors who have no physical presence but whose sales in Pennsylvania exceed $100,000 in the prior year, must register to collect and remit Pennsylvania sales tax", or use an approved certified service provider. It says "The sales threshold of $100,000 will be measured by calendar year." and "Sales are the gross amount on all channels, including taxable and nontaxable sales."
Exempt items and exemption certificates
The sales, use and hotel occupancy tax page (Pennsylvania, checked November 1, 2026) says "Major items exempt from the tax include food (not ready-to-eat); candy and gum; most clothing; textbooks; pharmaceutical drugs; sales for resale; and residential heating fuels such as oil, electricity, gas, coal and firewood." For a business that only sells to retailers, it says "A Pennsylvania Exemption Certificate (REV-1220), once issued to the supplier, may be used for all future tax-exempt purchases." and "This exemption is not valid for purchases to be consumed by the purchaser".
Federal estimated tax, corporations
The IRS estimated taxes page (In the US (federal), last reviewed or updated September 25, 2026) says "Corporations generally have to make estimated tax payments if they expect to owe tax of $500 or more when their return is filed."
Deductions and write-offs
Confirm with your state how it treats each item.
- Self-employment tax, federal: the IRS self-employment tax page (In the US (federal), last reviewed or updated October 30, 2026) says "you can deduct the employer-equivalent portion of your SE tax when calculating your adjusted gross income".
- Recordkeeping, federal: the IRS recordkeeping page (In the US (federal), last reviewed or updated May 1, 2026) says "You may choose any recordkeeping system suited to your business that clearly shows your income and expenses."
- Pennsylvania treatment of your business expenses: ask the Department of Revenue or a tax professional how they are handled on your Pennsylvania return.
Practical tips
- Ask the Department of Revenue which local rate applies to a sale. The tax rates table (Pennsylvania, checked October 31, 2026) lists a local sales tax of "1 percent for Allegheny County" and "2 percent for Philadelphia".
- File on time even with a small balance. The personal income tax guide (Pennsylvania, checked October 31, 2026) says "The maximum penalty is 25 percent of the unpaid or late-paid tax."
- Store your rates once. Billed's invoice software page (checked October 31, 2026) says "Save your tax rates and settings once, and Billed calculates taxes automatically when you create invoices and estimates."
- Confirm current rates with the Department of Revenue or a tax professional before you file.
Frequently asked questions
Explore More State Tax Guides
Create a Pennsylvania invoice
Create invoices, track payments and keep your clients' details in one place with Billed.
At a glance
| Topic | From the Department of Revenue or the IRS |
|---|---|
| Personal income tax | "3.07 percent" (Pennsylvania, checked October 31, 2026) |
| Sales, use and hotel occupancy tax | "6 percent" (Pennsylvania, checked October 31, 2026) |
| Local sales tax | "1 percent for Allegheny County", "2 percent for Philadelphia" (Pennsylvania, checked October 31, 2026) |
| Corporate net income tax, 2026 | "7.49 percent" (Pennsylvania, checked October 31, 2026) |
| Self-employment tax | "The self-employment tax rate is 15.3%." (In the US (federal), last reviewed or updated October 30, 2026) |
When this isn't for you
Aimed at sole proprietors, partnerships and corporations with Pennsylvania activity. Local earned income and business privilege taxes, payroll withholding and realty transfer tax aren't covered here; ask the Department of Revenue, your municipality or a tax professional.