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Legacy Content
Pennsylvania tax guidance, accounting resources, and small business write-offs
Understanding Pennsylvania taxes, deductions, and small business accounting — with free resources and educational content.
Free electronic forms for anyone — no income limit
irs.gov/freefile-fillable-forms →Pennsylvania has a flat personal income tax rate of 3.07% as of 2026 — one of the lower flat rates in the US.
| PA Flat Rate | 3.07% |
| Philadelphia Wage Tax | +3.89% (residents) |
| Philadelphia Net Profits Tax | +3.89% (businesses) |
| Local Earned Income Tax (varies) | ~0-2% |
| Rate | Single | Married Joint | Head of Household |
|---|---|---|---|
| 10% | $0 - $11,925 | $0 - $23,850 | $0 - $17,000 |
| 12% | $11,926 - $48,475 | $23,851 - $96,950 | $17,001 - $64,650 |
| 22% | $48,476 - $103,350 | $96,951 - $206,700 | $64,651 - $98,450 |
| 24% | $103,351 - $201,050 | $206,701 - $394,600 | $98,451 - $191,950 |
| 32% | $201,051 - $383,900 | $394,601 - $501,050 | $191,951 - $304,675 |
| 35% | $383,901 - $487,450 | $501,051 - $751,600 | $304,676 - $365,100 |
| 37% | $487,451+ | $751,601+ | $365,101+ |
| Standard Deduction (Single) | $15,000 | 2025 |
| Standard Deduction (Married Joint) | $30,000 | 2025 |
| Child Tax Credit (per child) | $2,000 | $1,700 refundable |
| Earned Income Tax Credit (min) | ~700-7,800 | Based on income/kids |
| Student Loan Interest Deduction | $2,500 | Above income limit |
| HSA Contribution Limit (Individual) | $4,300 | 2025 |
| 401(k) Contribution Limit | $23,500 | 2025 |
| IRA Contribution Limit | $7,000 | 2025 ($8K if 50+) |
| Self-Employment Tax Rate | 15.3% | 12.4% SS + 2.9% Medicare |
| SS Wage Base | $176,100 | 2025 |
| SE Tax Deduction | 50% of SE tax | Above-the-line deduction |
| Quarterly Filing Threshold | $1,000 | Net self-employment income |
If you operate as a sole proprietor or single-member LLC, you can deduct ordinary and necessary business expenses. Here are the key categories:
| Home Office | $5/sq ft (up to 300 sq ft) | Simplified method |
| Home Office | % of home expenses | Regular method |
| Vehicle (Business Use) | $0.70/mile (2025) | Standard mileage |
| Vehicle (Business Use) | Actual expenses | Or depreciation |
| Health Insurance (Sole Prop) | 100% | Above-the-line |
| Retirement (SEP-IRA) | 25% of net earnings | Up to $69,000 |
| Retirement (Solo 401k) | $69,000 max | 2025 |
| Qualified Business Income | 20% deduction | Subject to limits |
| LLC Type | Taxes | Complexity |
|---|---|---|
| Sole Proprietor | Schedule C on 1040 | Lowest |
| Single-Member LLC | Schedule C (disregarded) | Low |
| Multi-Member LLC | Schedule K-1 (partnership) | Medium |
| LLC → S-Corp | Form 1120-S | Higher |
| LLC → C-Corp | Form 1120 | Highest |
💡 Tip: Most small businesses with < $80K net income can stay as sole proprietor/single-member LLC. S-Corp election makes sense when net earnings exceed ~$80K due to SE tax savings. Consult a CPA.
These deductions reduce your Adjusted Gross Income before the standard/itemized split:
| Traditional IRA Contribution | $7,000 ($8,000 if 50+) |
| Student Loan Interest | $2,500 (income limits) |
| HSA Contribution | $4,300 (individual) |
| SE Tax Deduction | 50% of SE tax |
| Self-Employment Health Insurance | 100% |
| Educator Expenses | $300 |
| Moving Expenses (military) | Above-the-line |
| Medical/Dental Expenses | Over 7.5% of AGI | 2025 |
| State & Local Taxes (SALT) | $10,000 max | 2025-2026 |
| Mortgage Interest | Up to $750K | Primary + second home |
| Charitable Contributions | Up to 60% of AGI | Cash donations |
| Casualty Losses | Over 10% AGI | Limited (disasters) |
| PA 529 Contribution | Up to $18,000/year | State deduction |
| Medical Savings Account | Contributions | PA MSAs |
| Keystone Scholarship/FAFSA | Varies | Education credits |
These YouTube channels and shows can help you understand personal finance, taxes, and small business accounting:
Financial Order of Operations, tax strategies, wealth building. Great for F.I.R.E. mindset.
YouTube →Clear, concise explanations of taxes, investing, and personal finance basics.
YouTube →Entertaining tax tips and common mistakes. Good for staying updated on tax changes.
YouTube →How to do accounting, understanding financial statements, bookkeeping basics.
YouTube →Bookkeeping for non-bookkeepers. Practical tips for small business owners.
YouTube →E-commerce and small business accounting, QuickBooks tips, tax deductions.
YouTube →Broke people to rich, real estate investing, stock market basics.
YouTube →Good documentation is essential for tax deductions and IRS audits. Here's how to track everything effectively:
| Type | What to Keep | How Long |
|---|---|---|
| Receipts | Item, amount, date, vendor, business purpose | 7 years |
| Invoices | Client name, services, amounts, dates | 7 years |
| Mileage Log | Date, miles, destination, business purpose | 7 years |
| Bank Statements | All pages, highlighted business expenses | 7 years |
| Credit Card | Statements + receipts for deductions | 7 years |
| Home Office | Square footage, photos, utility bills | 7 years |
| High income | $200K+ increases audit chance |
| Large deductions | % of income much higher than average |
| Schedule C losses | Year after year = hobby red flag |
| Cash businesses | Cash-intensive = extra scrutiny |
| No documentation | Missing receipts = disallowed deductions |
| Math errors | Simple red flag — use software! |
Pro tip: If it's not documented, the IRS doesn't consider it a valid business expense. Take photos of receipts immediately and back everything up. Better safe than sorry.