Tax Planning for Physicians in Pennsylvania (2026)

Physicians in Pennsylvania face a top rate of 3.07% on top of the 37% federal bracket and payroll taxes. This guide summarizes the 2026 Pennsylvania rules that matter most to doctors, dentists and practice owners.

Pennsylvania income tax rates for 2026

Pennsylvania has a flat income tax of 3.07% for 2026.

Pass-through entity tax (SALT workaround)

Not enacted as of this update. Watch for legislation; until then, owners deduct state income tax only through the individual SALT deduction.

Local income taxes

Nearly every Pennsylvania municipality levies an earned income tax; Philadelphia's wage tax is 3.735% for residents and 3.425% for nonresidents (from July 1, 2026), and Pittsburgh residents pay 3% (city and school district).

Planning notes for Pennsylvania physicians

• Pennsylvania taxes income at a flat 3.07%, but it does not allow a deduction for employee 401(k) deferrals, so W-2 physicians pay state tax on money they put into a 401(k).
• Pennsylvania has not enacted an elective pass-through entity tax (one has been proposed), so Pennsylvania practices cannot yet use the SALT workaround.
• Local earned income taxes in Philadelphia and Pittsburgh can exceed the state tax for physicians who live or work there.

Federal strategies that apply in every state

State tax is only part of the picture. The federal rules drive most of the savings for physicians in Pennsylvania:

• W-2 physician tax strategies: maximize 401(k)/403(b), 457(b), HSA and the backdoor Roth.
• 1099 physician tax planning: solo 401(k), deductions and the S corporation decision.
• Practice owners: entity, compensation, cash balance plans and exit planning.
• Real estate and cost segregation for physicians with time to participate.

City guides for Pennsylvania physicians

Local taxes and planning notes for physicians in Philadelphia, Pittsburgh, Allentown, Hershey, Harrisburg. Our planning is delivered virtually, so location does not limit access.

Guides by specialty

Surgeons · Anesthesiologists · Radiologists · Orthopedic Surgeons · Cardiologists · Dentists · Dermatologists · Emergency Physicians · Gastroenterologists · Ophthalmologists · Neurosurgeons · Plastic Surgeons · Psychiatrists · Hospitalists · Pain Management Physicians

This article is for general educational purposes and is not tax, legal or investment advice. Tax law changes often and its application depends on your facts. Figures reflect 2026 rules as published by the sources listed above. Consult a qualified professional before acting. See our editorial policy.