Capital Gains Tax in Pennsylvania

Pennsylvania is one of the few states with a flat income tax, and that flat 3.07% rate applies to capital gains the same as any other income. Add federal and NIIT and an investment property seller faces a combined ceiling of 26.9%, one of the lower totals in the Mid-Atlantic.

Deferring Pennsylvania capital gains with a 1031 exchange

Because the state rate is flat, a 1031 exchange in Pennsylvania defers a predictable chunk: 3.07% of the gain, plus the federal and NIIT portions, for a total of 26.9% pushed down the road. The mechanics follow the federal rules exactly, with the same 45-day identification window and 180-day closing deadline. Model the swap in the 1031 exchange calculator and keep those two dates from the timeline calculator in view.

The rate you're deferring

That flat 3.07% never moves with income level, which makes Pennsylvania one of the more predictable states to plan around. It's still added to the federal 20% and the 3.8% NIIT for anyone above the income threshold, bringing the full combined figure to 26.9%. Get a specific number, recapture included, from the capital gains tax calculator.

What this means for your sale

The rate above is a ceiling, not a guarantee; your actual Pennsylvania liability depends on income, basis, and how much of the gain is recapture. Run your own Pennsylvania figures through the 1031 exchange calculator.