Pennsylvania tax deductions and write-offs (2026)

Yes: redeemable ground rent, common in Baltimore and parts of Pennsylvania, is deductible as mortgage interest if you itemize.

Yes on your federal return if you itemize, within the $40,400 SALT cap. Pennsylvania adds its own break: Property Tax/Rent Rebate up to $1,000 (plus supplements) for 65+, widow(er)s 50+, disabled 18+; income up to $48,110.

Yes: Pennsylvania offers the Property Tax/Rent Rebate Program. Annual rebate of $380 to $1,000 (depending on income) for older and disabled renters and homeowners, applied for on Form PA-1000, online through myPATH or by mail. Age 65+, widow(er) 50+, or disabled 18+; household income of $48,110 or less (half of Social Security excluded), adjusted annually for cost of living.

No. Pennsylvania fully exempts military retired pay, along with other qualifying retirement income, from state income tax. Other retirement income: Distributions from eligible employer retirement plans after meeting the plan's retirement age/years-of-service conditions are exempt, as are IRA distributions after age 59½. Early distributions are taxed to the extent they exceed contributions.

No. Distributions from eligible employer retirement plans after meeting the plan's retirement age/years-of-service conditions are exempt, as are IRA distributions after age 59½. Early distributions are taxed to the extent they exceed contributions.

No. Social Security benefits are not taxable under Pennsylvania personal income tax.

Yes: Pennsylvania offers the Working Pennsylvanians Tax Credit, 10% of the federal EITC (max $805 for 2025) (refundable). New starting tax year 2025. Anyone who qualifies for the federal EITC qualifies. The DOR calculates it automatically when a copy of the federal Form 1040 is attached to the PA-40. The 2026 maximum should track the federal credit but had not been published when checked.

Only instead of income tax: itemizers in Pennsylvania pick sales tax (6% state rate, about 6.34% with local taxes) or state income tax, whichever is bigger. The only local add-ons are Allegheny County (1%) and Philadelphia (2%); groceries and most clothing are exempt.

No: Pennsylvania doesn't base registration on your car's value, so it isn't deductible as personal property tax. Passenger registration is a flat $48 per year, plus a $5 county fee for local use in participating counties.

Pennsylvania has a flat 3.07% tax, lets employees deduct unreimbursed business expenses (Schedule UE), and doesn't tax retirement income for retirees.

Yes on your Pennsylvania return: $19,000 per beneficiary per taxpayer ($38,000 joint if each spouse has income). Contributions to any state's 529 plan count. Tax parity state; cap tracks the federal gift-tax exclusion and can't exceed the contributor's taxable income; rollovers not deductible.

No state child tax credit, but Pennsylvania has a child care credit: Child and Dependent Care Enhancement Program: refundable credit equal to 100% of the federal child and dependent care credit, subject to limits on the qualifying expenses used to calculate it. Pennsylvania has no child tax credit. Its new Working Pennsylvanians Tax Credit (a state EITC) is separate. Pennsylvania does have an earned income credit: 10% of the federal EITC (max $805 for 2025).

Yes, as a business expense: Pennsylvania charges $125 to form an LLC; ongoing: $7 annual report. Due Sept 30 for LLCs; annual reports began in 2025 (replacing the old decennial report).