Composite Index
99.5
US average = 100.0
Pennsylvania (PA) | Composite 99.5
Pennsylvania Cost of Living 2026
Pennsylvania sits at 99.5 on the 2026 C2ER cost of living index, almost exactly the US average. The flat 3.07 percent state income tax is among the lowest non-zero rates in the country, but local Earned Income Tax (EIT) can add 1-4 percent depending on municipality. Philadelphia and Pittsburgh anchor the cost curve; central and northern Pennsylvania run well below the national average.
Composite 99.5Flat 3.07% income taxHousing index 93.5
Median Home
$268,500
2BR rent $1,180/mo
Median Income
$67,587
Household, Census ACS
Category breakdown
All 6 categories vs national average
| Category | PA index | National avg | Difference |
|---|---|---|---|
| Housing | 93.5 | 100.0 | -6.5% |
| Groceries | 101.8 | 100.0 | 1.8% |
| Utilities | 108.5 | 100.0 | 8.5% |
| Transportation | 105.2 | 100.0 | 5.2% |
| Healthcare | 103.5 | 100.0 | 3.5% |
| Miscellaneous | 99.2 | 100.0 | -0.8% |
Sources: BEA Regional Price Parities, C2ER Cost of Living Index, Census ACS 5-year (median income, home value), Pennsylvania Department of Revenue (income and sales tax), Pennsylvania Department of Community and Economic Development (local EIT rates), EIA (electricity rates), KFF (uninsured rate), Zillow ZHVI.
Pros / offsets
What works in Pennsylvania.
Flat 3.07 percent state income tax. The lowest non-zero flat-rate state income tax in the country. The Pennsylvania Department of Revenue publishes the schedule annually. The flat structure makes filing simple. Pennsylvania does not tax retirement income (Social Security, pensions, 401(k) distributions, IRA distributions are all exempt), which makes the state notably retirement-friendly.
Housing 7 percent below national average. Housing sub-index 93.5. Median home statewide $268,500. Pittsburgh metro median around $250,000 (one of the most affordable major metros in the Northeast). Central Pennsylvania and the smaller cities run well below national averages.
No tax on retirement income or Social Security. Pennsylvania is one of a handful of states that fully exempts retirement income from state tax, including Social Security, pensions, 401(k) and IRA distributions. For retirees with significant retirement-account income, this is a meaningful advantage over most states.
Strong healthcare networks. UPMC in Pittsburgh, Penn Medicine in Philadelphia, Geisinger in central PA, and Lehigh Valley Health Network are top-tier. Uninsured rate 5.5 percent per KFF, below the US average. Medicaid expansion is in effect.
Cons / drivers
Where Pennsylvania costs more.
Local Earned Income Tax adds 1-4 percent. Beyond the 3.07 percent state income tax, most Pennsylvania municipalities and school districts levy a local EIT, typically 1 percent for resident workers and up to 4 percent in Philadelphia (the city wage tax). For Philadelphia residents the combined state plus local can approach 6.97 percent, well above the headline 3.07 percent. The Pennsylvania Department of Community and Economic Development maintains the rate database.
Property tax above average. Effective property tax rate 1.36 percent per the Tax Foundation, above the US average of about 0.9 percent. On the $268,500 median home, the typical annual bill is around $3,650. Pennsylvania relies heavily on local property taxes for school funding, which produces wide cross-district variation. Some school districts in Allegheny County and the Lehigh Valley have effective rates above 2 percent.
Utilities sub-index 108.5. Above national average. Average residential electricity rate 16.85 cents per kWh per EIA, above average. Winter heating cost is substantial (natural gas and heating oil markets), particularly in central and northern Pennsylvania.
Sales tax 6 percent state. 6 percent state, with Philadelphia and Allegheny County levying additional 1-2 percent local. Groceries are largely exempt; clothing is exempt. Prepared food is taxed.
Tax + benefit signals
Pennsylvania tax and access overview
State income tax
3.07%
Graduated or flat
Property tax effective
1.36%
Of assessed value, annual
Sales tax (state)
6.00%
Local can add 1-4% more
Uninsured rate
5.5%
Medicaid: expanded
Metro variation
State averages mask city variation.
Pennsylvania state composite 99.5 averages meaningful regional variation:
Philadelphia MSA: Roughly 105-115 on the Regional Price Parity scale. Median home Philadelphia MSA $350,000; Philadelphia city proper around $230,000; affluent Main Line suburbs (Lower Merion, Radnor, Tredyffrin) often exceed $700,000. Combined with the 4 percent city wage tax, total tax burden for Philadelphia residents is meaningfully higher than the state averages suggest.
Pittsburgh MSA: Roughly 90-95. Median home around $250,000 per Zillow ZHVI. Among the most affordable major metros in the Northeast. Strong healthcare (UPMC) and tech (Carnegie Mellon University spinoffs, Google Pittsburgh, autonomous-vehicle cluster) economies. Reinvented former steel-city.
Lehigh Valley (Allentown, Bethlehem, Easton): Roughly 95-100. Median home around $325,000. Industrial-and-logistics economy boosted by warehouse expansion (Amazon, FedEx, UPS regional hubs). The Lehigh Valley has been one of the fastest-growing parts of the state since 2015.
Harrisburg / Hershey: Roughly 92-97. Median home around $260,000. State capital economy, healthcare (Penn State Health Milton S. Hershey Medical Center), and chocolate-industry heritage. Steady, modest-growth small metro.
Lancaster: Roughly 93-98. Median home around $310,000. Agricultural-and-tourism economy, with strong Plain Sect (Amish, Mennonite) community influence on land prices and agricultural retention.
State College (Penn State): Roughly 100-110. Median home around $375,000. Penn State University drives demand; tight student-housing market.
Erie / Scranton / Wilkes-Barre: Roughly 82-88. Median home $145,000-180,000. Among the cheapest housing markets in the Northeast.
Northern and central Pennsylvania (rural counties): Roughly 78-85. Median home $140,000-180,000. Agricultural, energy (Marcellus Shale gas), and rural economy.
Frequently Asked
Pennsylvania cost of living, answered
Why does Pennsylvania have such a low flat income tax?
The Pennsylvania Constitution's Uniformity Clause has been interpreted by the state Supreme Court as requiring uniform taxation, which has historically blocked graduated-rate proposals. The flat 3.07 percent rate has not changed materially since 2003. Most other US states either levy graduated rates or zero income tax; the flat-low structure is rare. The trade-off is high property tax and meaningful local Earned Income Tax.
What is the Philadelphia city wage tax?
Philadelphia levies a wage tax of approximately 3.75 percent on Philadelphia residents (for both work performed inside and outside the city) and approximately 3.44 percent on non-residents who work in Philadelphia. Combined with the 3.07 percent state income tax, a Philadelphia resident's total state plus local income tax is approximately 6.82 percent. The City of Philadelphia Department of Revenue publishes the current rates each year. This is a major consideration for anyone choosing to live in vs commute into Philadelphia.
Is Pittsburgh really one of the most affordable major metros in the US?
Among Northeast metros, yes. Pittsburgh MSA Regional Price Parity is roughly 90-95 vs Philadelphia 105-115, New York 130+, and Boston 165+. Median home Pittsburgh around $250,000 is one of the lowest among the country's top-50 metros. The Carnegie Mellon spinoff economy (Google Pittsburgh, autonomous vehicles, robotics, AI startups) has revitalised the city while keeping housing affordability. UPMC anchors the largest employer.
Does Pennsylvania really not tax any retirement income?
Correct. Pennsylvania does not tax Social Security benefits, pension distributions, 401(k) distributions, traditional IRA distributions, or Roth IRA distributions for residents over 59 1/2. This makes the state notably retirement-friendly compared with most peers. The exemption combined with the moderate cost of living in many parts of the state makes Pennsylvania a serious retirement option even though it is not typically marketed as a retirement destination.
Why is Pennsylvania property tax so high?
Pennsylvania relies heavily on local property taxes for school funding rather than state-level funding. School-district millage rates vary substantially across the 500 school districts. In Allegheny County and the Lehigh Valley, effective rates above 2 percent are common. The state has periodically debated reform but the structural reliance on local property tax for K-12 funding has been durable. For homebuyers, always check the specific school district millage before committing.
How does the Lehigh Valley compare to Philadelphia for living cost?
Lehigh Valley (Allentown, Bethlehem, Easton) runs about 10 percent cheaper than Philadelphia MSA at the median, with housing meaningfully cheaper and no city-level wage tax. The warehouse-logistics economy has driven steady job growth since 2015. Commute to Philadelphia is roughly 60-75 minutes by car (not realistic for daily commute) but New York City is accessible by Trans-Bridge bus. For someone willing to live further from Philadelphia, the Lehigh Valley combines lower housing cost with state-only income tax exposure.
Should I move to Pennsylvania from New York or New Jersey for tax reasons?
For high earners, the flat 3.07 percent state income tax is meaningfully lower than New York (top marginal 10.9 percent) or New Jersey (top marginal 10.75 percent). The Pittsburgh and Lehigh Valley housing markets are also dramatically cheaper than NYC metro or North Jersey. The trade-offs are reciprocal-agreement complications for cross-border workers and Pennsylvania's high property tax. For Philadelphia residents, the city wage tax narrows the gap meaningfully. The /calculator page lets you compare net.