Pennsylvania Sales Tax

If you operate or do business in Pennsylvania, you may be responsible for collecting and remitting payment of sales and use tax to the State of Pennsylvania. With a state tax and several local counties and cities charging additional sales tax, it’s important to know how the system works in this state and whether you are responsible for collecting.

In this guide, we will review the Pennsylvania sales tax rates, the process of acquiring a permit, how to determine if you have nexus from out of state and need to collect sales tax, and the due dates and penalties for late filings.

Pennsylvania Sales Tax Rates

Pennsylvania has state and local tax rates depending on where you operate. They include:

• The state sales tax rate in Pennsylvania is 6.0%.
• There is an additional local sales tax in some counties and municipalities. The highest tax rates in the state are in Philadelphia with 8.0% and Allegheny County (Pittsburgh) with 7.0%.

Because the additional sales tax rates apply mostly to these two large cities and a handful of other municipalities, you will likely deal with them at some point, depending on the transactions you perform in the state.

Determining Sales Tax Nexus in Pennsylvania

If you operate your small business in Pennsylvania, then you are required to collect and remit payment for sales tax here. However, it’s not always so simple for those who operate outside of Pennsylvania but do business in the state in one form or another. For those businesses, it is important to establish nexus.

The following factors will allow you to determine if you have sales tax nexus in Pennsylvania and therefore are required to collect business tax here:

• A physical location in the form of an office, place of business, or real estate property
• An employee, independent contractor, or other representatives in the state
• Physical goods stored in a warehouse
• Leasing any property located in the state
• Delivering merchandise into the state

For more information about what constitutes nexus and how Pennsylvania defines the term, they offer a detailed breakdown on the Department of Revenue website here.

You should also consider if you use the Amazon FBA program to fulfill shipments for your company. Because there are several fulfillment centers in Pennsylvania, there is a good chance that at least some of your items are stored here. It is recommended that you check inventory with Amazon to determine if this will affect you and require you to collect sales tax in the state.

Pennsylvania’s economic nexus tax law requires remote sellers who make $100,000 or more in annual gross sales to collect and remit sales tax to Pennsylvania.

What Is Eligible for Sales Tax in Pennsylvania?

Like most states, Pennsylvania charges sales tax on almost all tangible personal property and only a few specific types of services. Here are some additional details on what you will be required to collect sales tax on and what will be eligible for exemption.

• Physical Goods – Most tangible personal property is taxable in Pennsylvania, with a number of exemptions for specific items.
• Services – While most services are not taxed in Pennsylvania, some may be subject to sales tax, including alterations or tailoring to a suit or formal wear that was just purchased. Other services that are taxed in Pennsylvania include lobbying services, credit reporting, secretarial and editing, employment agencies, help supply, pest control, building maintenance, and cleaning, lawn care, self-storage, and premium cable.
• Bringing Items in from Outside the State – If you purchase an item from outside the state of Pennsylvania and bring it into the state you may be responsible for paying sales tax on that item directly if it was not collected by the merchant.
• Exemptions for Physical Goods – Sales tax is not charged for grocery store food, drugs or medical supplies, wrapping supplies, water, clothing (except formal wear), newspapers, and any sales to the government.

The State of Pennsylvania maintains an up-to-date document with a list of all applicable sales tax and exemptions on their website for review of these items in greater detail.

Registration

If you have nexus in Pennsylvania and must collect sales tax, you must register with the state to acquire a permit. This can be done online at the following location: Register for a sales tax permit through the Online myPATH website.

There is no charge to apply for a sales tax permit, though if you are also registering a business at the same time, you will need to pay a fee for that, depending on the type and location of your business. Be sure to have business information and licenses ready at the time of application.

Filing

You will pay Pennsylvania sales and use tax by:

• For Those in State – For the majority of transactions, the 6% state tax will apply. The state is origin-based, so your location will determine what you charge. This simplifies things greatly for those who live and operate in-state.
• Out of State Sellers – If you have sales tax nexus in the state of Pennsylvania, you must collect sales tax based on the location of the product’s purchaser. Again, determining the destination and the correct rate will be important to ensure accurate reporting. 
• Shipping Charges – In Pennsylvania, the shipping is taxable only if the items shipped are taxable. This applies to handling as well.
• Filing Your Tax Returns – The Pennsylvania Department of Revenue has an online portal through which you can pay your sales tax due here.

Like many other states, Pennsylvania offers a discount for paying all of your sales and use tax owed. If you pay on time, you will receive a deduction on your tax returns depending on your filing frequency. For those that file monthly, it is the lesser of 1% or $25. For quarterly filers, it is the lesser of 1% or $75. For semi-annual filers, it is the lesser of 1% or $150.

The deadline for payment will be determined by the filing frequency assigned to you at the time you receive your permit. This will be affected by the total amount owed with each return.

Deadlines

Quarterly: For those with less than $600 in liability for the third quarter of the previous calendar year, you will pay quarterly.

Period	Due Date
January – March (Q1)	April 20
April – June (Q2)	July 20
July – September (Q3)	October 20
October – December (Q4)	January 20

Monthly: For those who owe greater than $600 from the third quarter of the previous calendar year, you will be required to pay on a monthly basis. Pennsylvania also requires those whose liability was greater than $25,000 in that time period to prepay each month 50% of that estimated liability for this time period.

Period	Due Date
January	February 20
February	March 20
March	April 20
April	May 20
May	June 20
June	July 20
July	August 20
August	September 20
September	October 20
October	November 20
November	December 20
December	January 20

Semi-Annual: If your liability for the third quarter of the previous calendar year was less than $75, then you can pay semi-annually.

Penalties and Interest for Late Payments

If you pay your sales tax remittance late, there is a 5% late fee per month overdue up to a maximum of 25% penalty. If you underpaid or did not pay your tax due, then there is also a 3% per month of tax unpaid penalty up to 18% maximum. There are additional penalties as well for fraudulent returns and repeat offenders to the above situations.

Resources:

• State of Pennsylvania Department of Revenue
• Filing deadlines for each frequency
• myPATH online payment portal for sales tax owed
• Retailer’s information guide for State and Local Sales, Use, and Occupancy Tax

Pennsylvania Sales Tax Software

If you operate in the State of Pennsylvania and know you’ll need to collect sales tax there for upcoming transactions, there are a number of things you’ll need to keep track of to ensure tax compliance. From data review to sorting of transactions and determining the best rate for each sale made into the state, it’s important that you get it right. That’s why TaxTools sales tax calculator software is a good fit for so many sellers who do business in the state. If you have an eCommerce site or other online platform, it can work with your existing system and help you get the sales tax collection process right. Contact us today to learn more or to sign up for a free trial.

Last updated August 2024