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HEAD-TO-HEAD TAX COMPARISON · 2026

COUNTRY A Pennsylvania VS COUNTRY B Alabama

Side-by-side analysis of income tax, effective rates, and take-home pay for Pennsylvania and Alabama in 2026.

Daniel · CountryTaxCalc Updated August 2026 Tax Comparison 2026
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OVERVIEW
Pennsylvania's flat 3.07% income tax rate beats Alabama's top marginal rate of 5%, which kicks in on taxable income above just $3,000 — meaning most Alabama earners pay the top rate on the bulk of their income. At $100,000 income, Pennsylvania's state tax bill ($2,576) is $1,504/year lower than Alabama's ($4,080), and the gap widens to over $9,200/year at $500,000. But Alabama's average effective property tax rate (~0.41%) is among the lowest in the nation, and nearly a fourth of Pennsylvania's (~1.49%) — enough to flip the combined income-plus-property comparison in Alabama's favor for many homeowners: on a $400,000 home, Alabama's total income-plus-property bill can run about $2,800/year less than Pennsylvania's despite Alabama's higher income tax. Neither state has broad local income tax outside Pennsylvania's Philadelphia wage tax (3.79% on top of the state rate) — Alabama has no local income tax anywhere. On retirement income, Pennsylvania fully exempts Social Security, pensions, and 401(k)/IRA withdrawals at any age, while Alabama exempts Social Security and public pensions but taxes private pensions and 401(k)/IRA withdrawals at 2-5% beyond a modest age-65+ exemption ($6,000 single/$12,000 joint).
Section 01

The Big Picture

Top-line rates and effective take-home for a typical earner — including income tax, social contributions, and applicable surcharges.

🔔
COUNTRY A
Pennsylvania
TAX RATE
3.07%
Flat Tax
Flat 3.07% state rate on all income; Philadelphia residents add 3.79% city wage tax
🏈
COUNTRY B
Alabama
TAX RATE
2-5%
3-Bracket Progressive
2% up to $500, 4% up to $3,000, 5% above — no local income tax anywhere
TYPICAL ANNUAL DIFFERENCE
Moving from Alabama → Pennsylvania at $100,000
$1,504
That's $125/month back in your pocket
Section 02

Tax Savings by Income Level

Net take-home after all income tax, social contributions, and surcharges — for a single employee with no dependents.
GROSS INCOME
🔔 PA TAX
🏈 AL TAX
SAVINGS
10-YEAR
$50,000
$1,041
$1,580
$539
$5,390
$75,000
$1,808
$2,830
$1,022
$10,220
$100,000
$2,576
$4,080
$1,504
$15,040
$150,000
$4,111
$6,580
$2,469
$24,690
$250,000
$7,181
$11,580
$4,399
$43,990
$500,000
$14,856
$24,080
$9,224
$92,240
💡

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🔔

Pennsylvania Pros & Cons

+ PROS
  • Flat 3.07% state income tax beats Alabama's progressive rate (topping out at 5%) at every income level — saving $539 to $9,224/year
  • Full retirement-income exemption: Social Security, pensions, and 401(k)/IRA withdrawals are all tax-free at the state level, at any age
  • No local income tax outside Philadelphia — most Pennsylvania residents pay only the flat 3.07% state rate with no city add-on
  • Two lower-cost major metros — Philadelphia and Pittsburgh — with strong healthcare, higher-education, and robotics/tech employers
− CONS
  • Nearly four times Alabama's average property tax rate (~1.49% vs ~0.41%, among the lowest in the nation) — often flips the combined income-plus-property burden in Alabama's favor
  • Philadelphia residents pay an additional 3.79% city wage tax, pushing their combined rate to 6.86%
  • Pennsylvania levies an inheritance tax on transfers to non-spouse heirs (4.5%-15%) — Alabama has none
  • Colder winters and less warm-weather appeal than Alabama's Gulf Coast and year-round mild climate
🏈

Alabama Pros & Cons

+ PROS
  • Among the lowest average property tax rates in the country (~0.41%) — roughly a fourth of Pennsylvania's ~1.49%, often flipping the combined burden in Alabama's favor for homeowners
  • No local income tax anywhere in the state, unlike Philadelphia's 3.79% add-on for Pennsylvania residents
  • Social Security and public pensions are fully exempt from state tax, and Alabama uniquely allows a deduction for federal income tax paid
  • Lower overall cost of living than Pennsylvania, with growing aerospace, automotive, and manufacturing employment (Huntsville, Mobile, Birmingham)
− CONS
  • Top 5% marginal rate starts at just $3,000 of taxable income, so most earners pay the top rate on the vast majority of their income — costing $539 to $9,224/year more than Pennsylvania
  • Private pensions and 401(k)/IRA withdrawals are taxable beyond a modest $6,000 (single) or $12,000 (joint) age-65+ exemption — Pennsylvania exempts all of these entirely at any age
  • Smaller, more regionally concentrated job market than Pennsylvania's Philadelphia and Pittsburgh metro economies
  • Higher exposure to hurricanes and severe weather along the Gulf Coast
FAQ

Frequently Asked Questions

Is Pennsylvania or Alabama cheaper for state income tax?

Pennsylvania is cheaper at every income level. At $100,000, Pennsylvania's flat 3.07% costs $2,576 versus Alabama's progressive rate at $4,080 — a $1,504/year difference. At $500,000, the gap grows to $9,224/year. Alabama's top 5% bracket starts at just $3,000 of taxable income, so most earners are taxed at the top rate on the bulk of their income.

Which state has lower property tax, Pennsylvania or Alabama?

Alabama has the much lower average effective property tax rate at roughly 0.41%, among the lowest in the nation, compared to Pennsylvania's roughly 1.49% — nearly four times higher. On a $400,000 home, that's about $1,640/year in Alabama versus $5,960/year in Pennsylvania, a savings of about $4,320/year that can outweigh Pennsylvania's income-tax advantage.

So which state actually wins on combined income plus property tax?

It depends on home value. At $100,000 income with a $400,000 home, Alabama's combined bill (about $5,720) is lower than Pennsylvania's (about $8,536), because Alabama's large property-tax savings outweigh Pennsylvania's income-tax advantage. Renters or owners of lower-value homes will generally see Pennsylvania's lower income tax come out ahead instead.

Does Philadelphia's city wage tax change the comparison?

Yes. Philadelphia residents pay a 3.79% city wage tax on top of the 3.07% state rate — a combined 6.86%. At $100,000 income, that's roughly $6,366 total, above Alabama's $4,080, though Alabama has no city-level income tax anywhere to compare against.

Does either state tax retirement income like 401(k) and IRA withdrawals?

Pennsylvania fully exempts Social Security, pensions, and 401(k)/IRA withdrawals from state tax at any age. Alabama exempts Social Security and public pensions but taxes private pensions and 401(k)/IRA withdrawals at 2-5% beyond a modest age-65+ exemption ($6,000 single/$12,000 joint). Pennsylvania is meaningfully more retirement-friendly for retirees with private-sector pensions or large retirement account withdrawals.

How much would I save moving from Alabama to Pennsylvania?

At $100,000 income, moving from Alabama to Pennsylvania could save about $1,504/year in state income tax — but Pennsylvania's much higher property tax will likely offset part or all of that for homeowners. At $250,000 income, the income-tax savings grow to about $4,399/year, which more easily outweighs typical property-tax differences for higher earners.

Does Pennsylvania or Alabama have an inheritance or estate tax?

Pennsylvania levies an inheritance tax on transfers to non-spouse heirs: 4.5% for children and grandchildren, 12% for siblings, and 15% for other beneficiaries. Alabama has no estate or inheritance tax at all. This is worth factoring into estate planning, especially for Pennsylvania residents leaving assets to non-spouse relatives.

What is Alabama's unique federal-tax-deduction rule?

Alabama is one of the few states that allows taxpayers to deduct the federal income tax they paid from their Alabama taxable income. This softens Alabama's effective rate somewhat for higher earners with large federal tax bills, though it doesn't fully close the gap with Pennsylvania's flat 3.07% rate at most income levels tested.
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