Tag Archives: Local Option Taxes

Yesterday’s Brief pointed out how widespread the wage tax is in Pennsylvania and how, among the U.S. states, the local governments in the state account for 60% of all the localities levying a tax on earned income/personal income. The Tax Foundation has released a follow-up on local sales taxes in the U.S. and it is clear PA is not one of the top utilizers of this type of tax.

Only four states-Delaware, Montana, New Hampshire, and Oregon-have neither state nor local taxes on retail sales. Nine other states have only a statewide sales tax. The total combined rate, which adds the state rate and the average local tax rate, does not exceed 10% with Tennessee reporting the highest combined rate at 9.43%.

Pennsylvania has a statewide sales tax, but locally it is utilized in only two places: Philadelphia, where the rate is a combined 8% (6 points for the state and 2 local add-on points which are used for general city purposes and pension funding) and Allegheny County, where the rate is a combined 7% (6 points for the state and 1 local add-on point for the Regional Asset District). There were calls for a countywide sales tax as part of Harrisburg’s Act 47 plan, but that was quickly dismissed. And though the County Commissioners Association has advocated for an add-on sales tax for quite some time that has not come to pass.