Self-employed taxes and LLC costs in Pennsylvania, 2026
Pennsylvania taxes profit at one low flat rate from the first dollar, and nearly every town and school district adds its own tax on the same earnings.
Total tax on this income in 2026
$20,225
Put aside 24% of each payment · $5,056 per quarter
| Self-employment tax (15.3%) | $12,010 |
| Federal income tax | $5,790 |
| Pennsylvania income tax | $2,425 |
| QBI deduction used | $12,579 |
| Effective rate on all income | 23.8% |
With an S corp election and a $34,000 salary, about $3,402 less tax (check it).
Computed by Radif Partners from IRS and Pennsylvania agency documents read on October 15, 2026 · How we calculate
Pennsylvania's personal income tax is a flat 3.07 % with no standard deduction and no personal exemption, so it applies from the first dollar of net business profit. A single filer with $75,000 of profit owes about $2,140 to the state and $17,635 in total with federal income tax and self-employment tax, before local tax; at $120,000 the state share is $3,424. Local earned income tax then applies to the same net profits almost everywhere, usually around 1% outside the big cities, 3% in Pittsburgh and a Net Profits Tax of 3.735% for Philadelphia residents. An LLC costs $125 to form and $7 for the annual report that began in 2025. Pennsylvania treats a federal S corporation as a Pennsylvania S corporation with no entity income tax on ordinary profit; with a $50,000 salary on $120,000 of profit, the election saves about $4,928 a year in the calculator, which counts state unemployment tax of 3.822 % on the first $10,000.
Pennsylvania at a glance, 2026
| LLC filing fee | $125 |
| Annual Report | $7 a year |
| Income tax | flat 3.07 % |
| S corporation election | followed by the state |
| Tax on $75,000 of profit (single) | $17,635 in all, $2,140 to Pennsylvania |
Pennsylvania sorts income into classes and taxes each at 3.07 %, and a loss in one class cannot be used against income in another (PA Revenue, personal income tax). For a self-employed person with a day job, that matters: a first-year business loss on the net profits line does not reduce the tax on wages, as it would on the federal return. Combined with the absence of a standard deduction, it makes the state tax arrive early. A freelancer clearing $40,000 already pays about $1,141 to Harrisburg.
State income tax on a freelance profit
Pennsylvania income tax
$1,712
| State share of profit | 2.9% |
| Total with federal | $13,749 |
The local layer under Act 32
Outside Philadelphia, municipalities and school districts levy an earned income tax on wages and on net profits, collected by county-wide tax collection bureaus. The general cap is 1% combined, but home rule municipalities, distressed cities and some school districts can exceed it (DCED, Act 32 procedure manual). Pittsburgh is the best-known case at 3%, split between the city and its school district, and it also charges a payroll expense tax that reaches self-employed draws (City of Pittsburgh, taxes). The exact rate depends on your political subdivision code, which the state's lookup gives for each address. Many places also collect a small Local Services Tax per worker.
Philadelphia runs its own system: a Net Profits Tax on residents and nonresidents doing business there, and the Business Income and Receipts Tax, which lost its small business exemption from tax year 2025, so even a modest freelancer files it. The Philadelphia page computes both with the credit that links them, and the local business taxes guide compares this setup with Ohio's city taxes.
Estimates with a rising threshold
For 2026, Pennsylvania expects estimated payments once you anticipate at least $430 of tax, which is $14,000 of income not subject to withholding at 3.07 %. That threshold has been raised step by step and is scheduled to reach $17,000 for 2027 and $20,000 for 2028 (REV-413 (I), 2026). The penalty is avoided by paying the smaller of 90% of 2026 tax or the prior-year amount. Local earned income tax estimates go separately to the local collector.
LLC upkeep and S corporations
The Department of State charges $125 to form an LLC and, since 2025, $7 for an annual report filed between January 1 and September 30; from 2027, a company that misses it faces administrative dissolution (PA DOS, annual reports). The capital stock tax ended in 2016, so neither LLCs nor S corporations pay a franchise or minimum tax. A federal S corporation is a Pennsylvania S corporation automatically and pays corporate net income tax only on built-in gains; ordinary profit passes to the owners. The LLC vs S corp calculator shows how local earned income tax on the salary and distributions changes the picture, and New Jersey shows a neighbor that does charge S corporations.
City and county taxes on business income in Pennsylvania
| Place | Tax | Rate | Who pays |
|---|---|---|---|
| Philadelphia | Net Profits Tax (NPT) | 3.735% | No threshold; a return must be filed even at a loss. Credit against NPT of 60% of the BIRT net income portion paid. Tax year 2025 rates were 3.74% / 3.43%. |
| Philadelphia | Business Income and Receipts Tax (BIRT) | 5.65% | The $100,000 gross receipts exemption no longer applies from tax year 2025 (legal challenge). Tax year 2025 rates: 1.410 mills and 5.71%. Scheduled cuts each year; gross receipts portion 0 and net income 2.80% from 2038. |
| Philadelphia | Wage Tax / Earnings Tax | 3.735% | July 1, 2025 to June 30, 2026: 3.74% / 3.43%. |
| Pennsylvania (all municipalities and school districts outside Philadelphia) | Local Earned Income Tax (EIT) on wages and net profits | 1% | Cap can be exceeded by home rule municipalities, financially distressed municipalities, Act 24/Act 50 referendum school districts, etc. Annual final return due April 15; residents with net profits over $12,000 must file a declaration and pay quarterly estimates (April 15, July 15, Oct 15, Jan 15). |
| Pennsylvania (statewide, where levied) | Local Services Tax (LST) | varies | Where the rate exceeds $10, mandatory exemption if total earned income and net profits in the subdivision are below $12,000. |
| Pittsburgh | Earned Income Tax (city 1% + School District of Pittsburgh 2%) | 3% | Home rule city above the 1% Act 511 cap. |
| Pittsburgh | Payroll Expense Tax | 0.55% | Amounts of $2.00 or less not due. |
| Pittsburgh | Local Services Tax | varies | Upfront exemption when total earned income from all sources within Pittsburgh is less than $12,000. |