Pennsylvania Income Tax Brackets 2021: What You Need to Know

As the new year begins, many Pennsylvanians are wondering how the latest income tax changes will affect their wallets. The good news is that Pennsylvania's income tax rates remain relatively unchanged for the 2021 tax year. However, it's essential to understand how these rates apply to your individual situation.

Pennsylvania has a progressive income tax system, meaning that different income levels are taxed at varying rates. For the 2021 tax year, there are five income tax brackets in Pennsylvania:

* 3.07% on taxable incomes between $0 and $8,300

* 3.57% on taxable incomes between $8,301 and $23,600

* 4.46% on taxable incomes between $23,601 and $79,850

* 5.25% on taxable incomes between $79,851 and $245,750

* 5.95% on taxable incomes above $245,751

To illustrate how these brackets work, let's consider an example. Suppose you earn a taxable income of $40,000 in the 2021 tax year. Based on Pennsylvania's income tax rates, you would owe:

* 3.07% on the first $8,300 (=$255)

* 3.57% on the next $15,300 (=$547)

* This totals to $802 in state income taxes.

It's essential to note that these rates do not include any federal income tax deductions or credits you may be eligible for. Additionally, Pennsylvania has a separate corporate net income tax rate of 9.99%.

In conclusion, understanding Pennsylvania's income tax brackets can help you navigate the complex world of personal finance. By knowing how your taxable income is taxed, you can make informed decisions about your financial planning and budgeting. Remember to consult with a tax professional if you have any questions or concerns about your specific situation.

Pennsylvania income tax brackets 2021