How is Pennsylvania for Retirement?

Retirement in the Keystone State, Pennsylvania, brings you easy access to historic destinations and beautiful outdoor scenery all in one place. With some highly favorable tax conditions for retirees and an affordable cost of living, Pennsylvania is a fantastic destination for the right senior. Here are some key things to know about retirement in Pennsylvania.

Pennsylvania is a great state for retirement living. No retirement income is taxed at the state level, from Social Security benefits, pensions, 401(k) distributions, and retirement annuities. The local sales taxes are decidedly average at 6%, although the gasoline tax is a little high. Medical care is excellent in this state. The only real negative is higher-than-average property taxes, but some relief programs for low-income seniors exist. Overall, Pennsylvania is an excellent state to retire to, but do expect your heirs to have to pay some inheritance tax.

Is Pennsylvania Tax-Friendly for Retirement?

Pennsylvania is tax-friendly for retirees. There are no state income taxes on Social Security retirement benefits, private or company pensions, withdrawals from IRA or 401(k) retirement accounts, or any other retirement income once you reach 60 years of age. Federal taxes will still apply.

This is partially offset by the fact Pennsylvania does have an inheritance tax, and there are some other tax considerations to take into account, like property tax.

Your inheritance tax will vary depending on who you are leaving your worldly goods to. Descendants will face a 4.5% tax, siblings 12%, and any other person 15%. However, your surviving spouse will not be taxed, so you will only have one set of inheritance taxes to pay per couple.

How Much Are Sales Taxes in Pennsylvania?

Pennsylvania’s state sales tax rate is 6%. Allegheny County adds an additional 1%, while Philadelphia County adds another 2%. Luckily, there are some exemptions for common senior-focused products, including groceries, clothing, residential fuels, and prescription medication. The gasoline tax is also reasonably high at $0.61.

How Much Are Property Taxes in Pennsylvania?

Pennsylvania ranks 12th highest state for property taxes in the US. The effective property tax rate is 1.36%, higher than the national average of just under 1%. The Pittsburgh area has some of the highest property taxes in Pennsylvania. There are some property relief programs seniors can use to offset this.

If you are 65 years old, or a widow(er) older than 50, with an annual income under $35,000, you can receive from $250-$650 to offset property tax. This includes all income sources, including 50% of Social Security. Rebates work as follows:

Income under $8,000 annually: $650

Between $8,001 and $15,000: $500

Between $15,001 and $18,000: $300

Between $18,000 and $35,000: $250

Additionally, there is a homestead exclusion for homeowners of all ages which can relieve property taxes. This varies by county.

Pros of retiring in Pennsylvania

Rich heritage

Pennsylvania is one of the oldest American states and is rich in cultural heritage. Spend your retirement exploring iconic pieces of American history, art galleries, museums, and other amazing experiences

Stunning landscapes

Pennsylvania is home to 121 state parks, and also the spectacular Pocono Mountains. If bird watching, hiking, fishing, and boating sound like your idyllic retirement, this is definitely a state to consider.

Medical facilities

Pennsylvania is considered the 10th best state for medical care, with some world-renowned facilities in the state. If you want to ensure you have fantastic medical coverage in your golden years, Pennsylvania can definitely deliver.

Four season climate

This state has 4 distinct seasons, with exquisite fall and spring landscapes unfolding each year. In fact, Pennsylvania’s fall is renowned for its beauty.

Lower cost of living

Despite the few tax pitfalls we mentioned above, the overall cost of living is reasonably low. Paired with no income tax on retirement income sources, you can have a great retirement in this state.

Cons of retiring in Pennsylvania

Cold winters

Offsetting the beautiful annual variety in seasons comes cold winters, and snow can get as deep as 100 inches. If snow is a worry for you, avoid the Western areas of the state, especially around Lake Erie.

Property taxes

As we outlined above, Pennsylvania does have higher property taxes than many states, and relief is only available on the lower side of the income scale.

Traffic and roads

Pennsylvania is home to some bustling big cities that can make for great retirement destinations. However, as this is also one of the oldest states in the US, these are not always well laid out for modern traffic volumes, and congestion is common. The roads are also notoriously poorly kept.

Air quality

Pennsylvania ranks 11 on the scale of most polluted air in the US, primarily due to coal-burning power plants. The countryside may be less polluted than the city centers, but bear it in mind.

Inheritance tax

Unlike many of the best US states for retirement, Pennsylvania has inheritance taxes. If you are leaving your assets to anyone but your children or grandchildren, they can be steep, too.

Best places to retire in Pennsylvania

Johnstown

Johnstown has the feel of a big city without many of the problems. Crime is low, and it is a fun city with a wealth of things to do. It is also surprisingly affordable. With a historic main street and plenty to keep you entertained and active, it’s a great place for retirees in Pennsylvania.

Plymouth

Part of the appeal of Plymouth lies in easy access to New York and Philadelphia, so it is ideal for retirees who love travel. The city holds regular food festivals and is known for its lively and friendly atmosphere.

Nanticoke

Nanticoke is a fantastic town for retirees looking for peace, quiet, and plenty of country living. Surrounded by beautiful lakes, it’s the ideal place to unwind, slow down, and get back to nature.

Hanover

Hanover offers the best of rural and urban living to retirees. Lying close to Gettysburg and York, but without their sometimes inflated prices, crime is low. Despite the small-town feel, it has excellent amenities to enjoy and is great for foodies and art lovers.

Chester

A suburb of Philadelphia, Chester nestles along the banks of the Delaware River, providing gorgeous views. It’s picturesque and maintains a suburban feel, surrounded by parks and fun spots to explore. Yet urban amenities lie at your fingertips, too. If you want to bring a slice of your old life with you into retirement, consider Chester.