Taxes

The following is a summary of the most common Pennsylvania business taxes. Unlike some states, Pennsylvania does NOT levy a property tax on tangible personal property, machinery, or equipment.

Personal Income Tax (PIT)

  • Levied against the taxable income of resident, non-resident individuals, estates and trusts, partnerships, S corporations, and LLCs
  • The current rate is 3.07% (note: retirement income is not subject to Pennsylvania state income tax)

Corporate Net Income Tax (CNI)

  • Levied on domestic and foreign corporations doing business, carrying on activities, having capital or property employed or used in Pennsylvania, or owning property in Pennsylvania
  • Levied against federal taxable income without the federal net operating loss deduction
  • The current rate is 9.99%

Real Estate Transfer Tax

  • Imposed on the real value of property, including contracted improvements, transferred by deed, instrument, long term lease, or other writing
  • The current rate is 2.0% (1% to State, 1% to County)

Capital Stock/Foreign Franchise Tax

  • Levied on domestic corporations (incorporated in PA) and those foreign corporations (those incorporated outside PA)
  • Foreign corporations pay tax on capital stock apportioned in PA
  • The current millage rate is 1.89

Sales & Use (SUT) and Hotel Occupancy Tax

  • Levied on the retail sale, consumption, rental, or use of tangible personal property (note: non ready-to-eat foods, certain wearing apparel and residential heating fuels including, fuel oil, natural gas, coal, electricity, and firewood are exempt from tax). Machinery and Equipment used DIRECTLY in the manufacturing process is also exempt from sales tax.
  • Collected and remitted by those engaged in the making the taxable sale
  • Hotel Occupancy Tax levied on room rental charges for periods of less than 30 days by the same person
  • The current SUT and Hotel Occupancy Tax rate is 6.0%

Unemployment Compensation Tax (UC)

  • Paid on the first $8,750 of wages for each employee on an annual basis
  • The current new employer rate (excluding construction) is 3.6785%
  • The current new employer rate for construction is 10.1947%
2014 Standard UC Rate:
7.4254% (positive reserve account)
11.4192% (negative reserve account)

Workers’ Compensation

  • Mandatory coverage of employees engaged in the “regular course” of the employer’s business
  • Certain occupational classes are excluded
Source(s): Pennsylvania Department of Revenue and Pennsylvania Department of Labor and Industry

Other Taxes of Importance (Not all taxes are universally levied. Depending on the locality there could be other taxes that are administered. View detailed taxes and rates)

  • Real Estate Tax – Levied on the County, Municipal, and School District level. On average, real estate taxes in Franklin County are roughly 1.0% – 1.5% of fair market value of the property.
  • Earned Income Tax
  • Local Services Tax (LST)
  • Per Capita Tax
  • Amusement Tax
Source: Pennsylvania Department of Community and Economic Development Center for Local Government Services

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