Pennsylvania

Pennsylvania's personal income tax, adopted in 1971, is levied at a rate of 2.8% (the flat rate is dictated by the "uniformity clause" in the 1923 state constitution). Business taxes include a corporate net income tax of 9.99%, capital stock and franchise taxes, and taxes on public utilities, insurance premiums, and financial institutions. Pennsylvania's 6% sales and use tax exempts essential items like clothing, groceries, and medicines. Local sales taxes are limited to 1%. Programs such as the Target Jobs Tax Credit and the Employment Incentive Payment program provide tax credits for hiring welfare recipients or persons from specified groups that have special employment needs or high unemployment rates. The state has an inheritance tax and has taken action to disconnect its estate tax from the federal tax exemption, which is scheduled to expire in 2007. Gift and death taxes account for a comparatively substantial part of state tax collections: 6.2% in 2001 and 3.44% in 2002. Other state taxes include various license fees and stamp taxes. Most property taxes are collected by local government, which collects about 40% of all state and local revenues in Pennsylvania.

The state collected $22.135 billion in taxes in 2002 (down $436 million from 2001), of which 33.1% came from the general sales tax, 30.4% came from individual income taxes, 16.3% from selective sales taxes, 9.4% from license fees, and 5.4% from corporate income taxes. In 2003, Pennsylvania ranked 36th among the states in terms of combined state and local tax burden, which amounted to about 9.1% of income.

The following table from the US Census Bureau provides a summary of taxes collected by the state in 2002.