Updated October 5, 2026. Quick answer: Yes. “Pennsylvania personal income tax is levied at the rate of 3.07 percent”, and the Department’s guide says “Interest income is a gross taxable income class under Pennsylvania law.” Dividends are a separate class with the same rate.
How Pennsylvania treats dividends and interest
| Item | What the documents say |
|---|---|
| Treatment | Taxed as two separate income classes, interest and dividends |
| Rate | 3.07 percent |
| Own-state and federal bond interest | “Interest is not taxable income if received from direct obligations” of the Commonwealth, its political subdivisions or the U.S. government |
| Other states’ municipal bond interest | “Interest on obligations of other states, territories and their political subdivisions,” is taxable |
| Exempt-interest dividends | “An exempt-interest dividend paid after Jan. 1, 1993 is not taxable” when it comes from Pennsylvania or exempt federal obligations; such dividends from other states are taxable |
A $20,000 example
Dividends and interest of $20,000 that are all taxable are taxed at 3.07%, computed as $20,000 x 3.07% = $614. Interest from a Pennsylvania or U.S. obligation is not part of that.
What changes in 2026
The latest documents read print no 2026 change to the way dividends and interest are taxed.
Federal rules
The state’s treatment sits on top of the federal one. Qualified dividends and ordinary dividends are sorted out on the Form 1099-DIV, as the site explains in Box 1a and 1b: ordinary versus qualified dividends, and interest is reported as covered in 1099-INT Box 1. The IRS explains the federal side in Topic no. 403, Interest Received and Topic no. 404, Dividends.
Related: whether Pennsylvania taxes capital gains, whether Pennsylvania taxes pensions, how Pennsylvania taxes retirement income, dividends and interest tax by state, and how tax-exempt interest is reported.
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Answer againSources
- Personal Income Tax (Pennsylvania Department of Revenue): https://www.pa.gov/agencies/revenue/resources/tax-types-and-information/personal-income-tax
- PA Personal Income Tax Guide: Interest (Pennsylvania Department of Revenue): https://www.pa.gov/agencies/revenue/forms-and-publications/pa-personal-income-tax-guide/interest
- PA Personal Income Tax Guide: Dividends (Pennsylvania Department of Revenue): https://www.pa.gov/agencies/revenue/forms-and-publications/pa-personal-income-tax-guide/dividends
Sources: the primary documents linked above, read on October 5, 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.