Quick Answer
Pennsylvania does not tax most retirement income. Social Security, pensions, and qualified 401(k) and IRA distributions are all exempt from PA's 3.07% state income tax once you've reached retirement age — making Pennsylvania one of the most retiree-friendly states. The catch: PA taxes your 401(k)/IRA contributions during your working years (no deduction), so you're taxed on the way in, not the way out. Property and sales taxes still apply.
If you're retiring in Pennsylvania — or thinking about it — here's good news: the state leaves most retirement income alone. Pennsylvania is one of the few states that exempts Social Security, pensions, and retirement-account withdrawals from its income tax. Here's exactly what's tax-free and what isn't.
What Pennsylvania does NOT tax
Social Security benefits — Fully exempt from PA state income tax.
401(k) & 403(b) distributions — Not taxed once you've reached the plan's retirement age.
Traditional & Roth IRA withdrawals — Qualified distributions in retirement are exempt.
Public & private pensions — Exempt for retirees who meet age/service requirements.
What Pennsylvania DOES tax
401(k) & IRA contributions (while working) — No state deduction — you're taxed on contributions on the way in.
Early withdrawals before retirement age — Can be taxable to the extent they exceed your own contributions.
Wages from a post-retirement job — Any earned income is still subject to the 3.07% flat tax.
Taxed on the way in, not the way out
Because Pennsylvania doesn't give a deduction for 401(k) or IRA contributions, you pay the 3.07% state tax on that money while you're working — but you skip it entirely when you withdraw in retirement. The federal deduction still applies, so only your state treatment differs.
Remember, this is only the state side. The IRS still taxes traditional 401(k) and IRA distributions federally, and may tax part of your Social Security depending on your total income.
Plan your Pennsylvania numbers
Still working in PA and want to see your take-home? Use the Pennsylvania paycheck calculator. Estimating retirement savings growth? Try the retirement savings calculator or the Social Security calculator to project your benefit.