Pennsylvania taxes capital gains at 3.07%. Combined with federal taxes, your effective rate on a home sale could reach 21.9%.
PA State Rate
3.07%
Flat tax rate
Federal Rate
15%
Most common long-term bracket
Combined Effective
21.9%
On $150K taxable gain (example)
After the $250K/$500K exclusion, here's what a typical seller might owe.
If Pennsylvania is where your primary residence is located and you've lived there at least 2 of the last 5 years, you can exclude up to $250K (single) or $500K (married filing jointly) of your capital gain from both federal and state taxes.
Investment and rental properties in Pennsylvania don't qualify for the exclusion. You'll owe 3.07% state tax plus federal tax on the full gain, plus 25% depreciation recapture on any depreciation claimed.
In Pennsylvania, homes sold in March sell for 23% more than those sold in October (-15%). Timing your sale right can offset a significant portion of your tax bill.
Capital gains tax rates on home sales in Pennsylvania and nearby states.
| State | Rate | Tax on $150K Gain | Notes |
|---|---|---|---|
PennsylvaniaYou | 3.07% | $4,605 | Flat tax rate |
| 3.5% | $5,250 | Flat tax rate (2026) | |
| 5.12% | $7,680 | Top marginal rate | |
| 5.75% | $8,625 | Top rate; local surcharge possible | |
| 6.6% | $9,900 | Top marginal rate | |
| 10.75% | $16,125 | Top marginal rate | |
| 10.9% | $16,350 | Top marginal rate; NYC adds up to 3.876% |
Pennsylvania has one of the lowest flat tax rates at 3.07%, making it affordable for capital gains. Additionally, local earned income taxes (EIT) typically do not apply to investment income.
The Philadelphia and Pittsburgh metros drive most market activity. Philadelphia suburbs (Main Line, Montgomery County) have high property values.
PA's 3.07% rate is notably lower than New Jersey (10.75%) and New York (10.9%), making it attractive for cross-border buyers.
The state also imposes a real estate transfer tax of 1% (plus 1% local in most areas), totaling 2% on the sale price.
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