Selling a business in Pennsylvania: what the state takes (2026)
Pennsylvania’s top individual income tax rate is 3.07%. Here is what an owner selling company stock pays, with 2026 rules from official sources and worked examples at $10 million, $25 million and $50 million.
- 3.07%
- Top Pennsylvania income tax rate (2026)
- $767,500
- State tax on a $25M long-term gain
- 26.9%
- Combined federal and state rate on $25M
- 35 of 51
- Rank by total tax on $25M (1 = highest)
How Pennsylvania taxes a business sale
- Income tax
- Top rate 3.07%: Flat rate on all taxable income.
- Long-term capital gains
- Gains fall in Pennsylvania's 'net gains from the sale of property' income class and are taxed at the flat 3.07%, with no exclusion or preferential rate.
- Entity-level taxes
- The corporate net income tax rate is 7.49% for 2026 (down from 7.99% in 2025) and applies to C corps; S corps are generally pass-through for personal income tax.
- Local taxes
- Philadelphia's School Income Tax (3.74% for 2025) reaches only short-term gains on property held six months or less, so it does not apply to a long-term business sale. Local earned income taxes apply to wages and net profits, not capital gains.
Three worked examples
| Long-term gain | $10,000,000 | $25,000,000 | $50,000,000 |
|---|---|---|---|
| Federal capital gains tax (20%) | $2,000,000 | $5,000,000 | $10,000,000 |
| Net investment income tax (3.8%) | $380,000 | $950,000 | $1,900,000 |
| Pennsylvania tax | $307,000 | $767,500 | $1,535,000 |
| Total tax | $2,687,000 | $6,717,500 | $13,435,000 |
| Effective combined rate | 26.87% | 26.87% | 26.87% |
| Net proceeds after tax | $7,313,000 | $18,282,500 | $36,565,000 |
| Extra tax versus Texas | $307,000 | $767,500 | $1,535,000 |
Seller’s tax calculator
Estimate federal and state tax on a stock sale and what is left before fees and debt.
- Long-term capital gain
- $25,000,000
- Federal capital gains tax (20%)
- $5,000,000
- Net investment income tax (3.8%)
- $950,000
- Pennsylvania tax
- $767,500
- Taxable gain at 3.07%
- $767,500
- Total tax
- $6,717,500
- Effective rate on the gain
- 26.87%
- Net proceeds after tax
- $18,282,500
Illustration, not tax advice. Assumes a resident individual, the whole gain long-term, top marginal rates, no state credits, installment terms, QSBS exclusion or other planning, and no local taxes. Net proceeds are before transaction fees, debt repayment, escrows and earn-outs. Rates are for tax year 2026 where published; see the methodology.
Compare with other states
Neighboring states
- Delaware30.4% combined, $17.40M net
- Maryland32.3% combined, $16.93M net
- New Jersey34.5% combined, $16.36M net
- New York34.1% combined, $16.48M net
- Ohio26.8% combined, $18.31M net
- West Virginia28.4% combined, $17.91M net
Common comparisons
- California37.1% combined, $15.72M net
- Texas23.8% combined, $19.05M net
- Florida23.8% combined, $19.05M net
- Nevada23.8% combined, $19.05M net
- Washington33.5% combined, $16.63M net
- Tennessee23.8% combined, $19.05M net
Methodology and sources
Pennsylvania figures are for tax year 2026. Flat 3.07% rate, unchanged for 2026. The examples assume a resident individual selling privately held stock for a long-term gain equal to the sale price (zero basis), with every dollar taxed at the top marginal rates, the federal 20% capital gains rate and the 3.8% net investment income tax, and no planning, credits or local taxes. Full assumptions are in the report methodology.
All 50 states and DC with source URLs.
- 1Pennsylvania Department of Revenue, tax rates (PIT 3.07%; CNIT 7.49% for 2026)
- 2City of Philadelphia, School Income Tax
- 3City of Philadelphia, 2025 School Income Tax instructions (short-term = held six months or less)
- 4Tax Foundation, State Individual Income Tax Rates and Brackets, 2026. Secondary source
Data last updated October 26, 2026.
Cite this research
You may quote and republish figures from this page with attribution and a link to the source.
Citation
Laurent Capital Research, “The Seller’s Tax Map: What Selling a Business Costs in Every State (2026): Pennsylvania,” 2026, https://laurent.capital/research/seller-tax-map/pennsylvaniaLink (HTML)
<a href="https://laurent.capital/research/seller-tax-map/pennsylvania">The Seller’s Tax Map: What Selling a Business Costs in Every State (2026): Pennsylvania</a> (Laurent Capital)Planning a sale and weighing the tax cost?
We work alongside your tax advisors from the first valuation conversation, so structure and timing are settled before a buyer is at the table.