Updated October 4, 2026. Quick answer: No, for a retiree. For an IRA taken after retirement, death, disability or at 59½ with no early-withdrawal penalty, the Department of Revenue’s guide says “the department will consider the distributions exempt retirement income”. Employer plans qualify when paid to a person retired from service. Early distributions are different and can be taxable.
More state retirement-income schedules, line by line: Pennsylvania PA-40 retirement income.
Inherited an IRA? What the state’s own documents say about taxing those withdrawals: Pennsylvania tax on inherited IRA withdrawals.
Hold a 403(b) or 457(b)? What the state’s own documents say about taxing those withdrawals: does Pennsylvania tax 403(b) and 457(b) withdrawals.
Withdrawing from an IRA or 401(k)? Whether the state withholds tax from it, from its own documents: Pennsylvania tax withholding on IRA and 401(k) withdrawals.
Taking money out of your TSP? How the state taxes it, from its own tax documents: Does Pennsylvania tax TSP withdrawals?.
Contributing to an HSA? How the state taxes it, from its own tax documents: Does Pennsylvania tax HSA contributions?.
What Pennsylvania does with 401(k) and IRA withdrawals
The Department’s guide lists qualified plans under Section 401(a) (defined benefit and defined contribution), IRAs and Roth IRAs among eligible Pennsylvania retirement plans; a 401(k) is a defined contribution plan. The rate on income that is taxable is 3.07 percent; the Department says “Pennsylvania personal income tax is levied at the rate of 3.07 percent”.
| Item | What the documents say |
|---|---|
| Treatment | Exempt after retirement age; early distributions taxable above previously taxed contributions |
| State rate on taxable income | 3.07 percent, flat |
| Source | Pennsylvania Department of Revenue, Personal Income Tax Guide: Gross Compensation |
A $40,000 withdrawal
A $40,000 withdrawal after retirement from a traditional IRA or a 401(k) is treated as exempt retirement income, so the Pennsylvania tax on it is $0. The same withdrawal taken early, with a penalty, is taxable above your previously taxed contributions.
What changes in 2026
No change for 2026 appears in the documents read for this page; the rate page lists the same 3.07 percent.
Federal rules
The state’s treatment sits on top of the federal one. The IRS explains the federal tax on these withdrawals in Publication 590-B, Distributions from Individual Retirement Arrangements and Publication 575, Pension and Annuity Income.
Related: whether Pennsylvania taxes pensions, how Pennsylvania taxes retirement income, whether Pennsylvania taxes Roth conversions, and the state-by-state table of 401(k) and IRA withdrawal tax.
Find the right next step for your situation
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Compare vetted advisors for retirement withdrawals
If your portfolio is $250,000 or more, this connects you (free, with no obligation to hire anyone) with 2 to 3 vetted advisors.
Before you start, what actually happens. The matching service is run by WiserAdvisor, an independent advisor-matching company. It opens on their site, asks for your ZIP code and a few questions, and matches you with 2 to 3 vetted advisors. It is free to you.
WiserAdvisor states the service is built for portfolios of $250,000 and above. By submitting, you consent to emails, phone calls and text messages from WiserAdvisor and up to three advisors, so expect to be contacted. Clear Money Guide may earn a referral payment for a qualifying completed form, whether or not you ever hire anyone.
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See how an advisor plans your withdrawals
Price the destination before you decide. The matching service below introduces you to advisers who pay to meet you.
Before you start, what actually happens. The form is run by Kapitalwise, our advisor-matching partner. Kapitalwise sends your details to advisers who pay for the introduction, so expect calls and texts. Clear Money Guide may earn a referral payment for a qualifying submitted form, whether or not you ever hire anyone. This is free to you and there is no obligation to hire anyone.
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It asks about nine questions: age, investable assets, location; then your name, email and phone number, and verifies the phone by text. Nothing loads and nothing reaches Kapitalwise until you press the button.
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Answer againSources
- PA Personal Income Tax Guide: Gross Compensation (DSM-12): https://www.pa.gov/content/dam/copapwp-pagov/en/revenue/documents/formsandpublications/papersonalincometaxguide/documents/pitguide_grosscompensation.pdf
- Personal Income Tax: https://www.pa.gov/agencies/revenue/resources/tax-types-and-information/personal-income-tax
Sources: the primary documents linked above, read on October 4, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.