The border state escape. Pennsylvania's 3.07% flat rate is the lowest in the Northeast—dramatically cheaper than NYC's 12.7% combined. At $100,000: NYC $9,500 vs PA $3,070—save $6,430/year. Even Philadelphia's 6.86% combined rate (3.07% state + 3.79% city) beats NYC. Pennsylvania also fully exempts retirement income from state tax, making it a top destination for NY retirees. Close proximity allows some to maintain NYC ties while saving on taxes.

By CountryTaxCalc Research Team

Last Updated: April 2026

The Big Picture

🗽 New York

10.9%

High Tax State

Progressive + NYC tax

🔔 Pennsylvania

3.07%

Low Flat Tax

Lowest flat tax in Northeast

Typical Annual Savings

At $100,000 income:

$6,430

That is $536/month back in your pocket!

Tax Savings by Income Level

IncomeNY TaxPA TaxSavings10-Year
$50,000 $2,850 (NY state only)$1,535PA saves $1,315$13,150
$75,000 $4,600 (NY state only)$2,303PA saves $2,297$22,970
$100,000 (NYC) $9,500 (state + city)$3,070PA saves $6,430$64,300
$100,000 (Philadelphia) $9,500 (NYC)$6,860 (state + city)PA saves $2,640$26,400
$150,000 (NYC) $14,300 (state + city)$4,605PA saves $9,695$96,950
$200,000 (NYC) $19,500 (state + city)$6,140PA saves $13,360$133,600

New York Pros and Cons

✅ Pros

  • World-class job market (finance, media, tech)
  • Public transit eliminates car costs
  • Cultural capital: Broadway, museums, dining
  • Higher salaries than PA for equivalent roles

❌ Cons

  • 12.7% combined tax (10.9% state + 3.876% NYC)
  • Average rent $3,500/month Manhattan
  • Brutal winters with high heating costs
  • Taxes retirement income

Pennsylvania Pros and Cons

✅ Pros

  • 3.07% flat—lowest in Northeast
  • 100% retirement income exempt (Social Security, pensions, 401k)
  • Lower cost of living than NYC
  • Easy access to NYC/NJ job markets from eastern PA

❌ Cons

  • Philly adds 3.79% local tax (6.86% total)
  • Smaller job market than NYC
  • High property taxes in some counties
  • Car needed outside Philadelphia
💡

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Frequently Asked Questions

Q: How much will I save moving from NYC to Pennsylvania?

At $100,000 NYC income: save $6,430/year moving to PA outside Philly (9.5% → 3.07%). Moving to Philadelphia: save $2,640/year (9.5% → 6.86%). Over 10 years outside Philly: $64,300 saved. PA also has lower housing costs—median home $275K (PA) vs $750K+ (NYC area condo).

Q: Does Pennsylvania tax retirement income?

No—PA is one of the best states for retirees. Social Security, pensions, 401k/IRA distributions, and military retirement are 100% exempt from PA state income tax. A retiree with $80K retirement income pays $0 PA state tax vs ~$4,500 in NY state tax. This makes PA extremely attractive for NY retirees.

Q: Can I live in PA and commute to NYC?

Possible but difficult. From eastern PA (Allentown, Bethlehem): 90-120 minute commute to Manhattan. Some people do it for the tax savings. Be careful: if you work in NYC, you may owe NYC taxes on income earned there regardless of residence. Remote work is the optimal strategy—live in PA, work for NYC employer remotely, pay only PA's 3.07%.

Q: Is Philadelphia worth it vs suburbs?

Financially, PA suburbs beat Philly. Philadelphia's 3.79% city wage tax brings total to 6.86%—still better than NYC's 12.7%, but the suburbs at 3.07% are clearly cheaper. However, Philly offers urban amenities, no car needed, and easier NYC access via Amtrak. For lifestyle reasons, some prefer Philly despite higher taxes.

Q: What about upstate New York vs Pennsylvania?

Upstate NY (no city tax) pays ~$6,500 at $100K income vs PA's $3,070—PA still saves $3,430/year. But upstate NY has comparable housing costs to PA and similar lifestyle. The savings are smaller than NYC→PA moves. Choose PA for lowest taxes; choose upstate NY if you have specific job or family ties.

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