The Roth IRA in Pennsylvania

Pennsylvania does not tax a Roth IRA conversion — not at 3.07%, not at any age, and not in any of its local taxing jurisdictions, including Philadelphia. It does not tax a qualified Roth withdrawal either, with no dollar cap. What Pennsylvania taxes is your Roth at death: inheritance tax reaches an inherited Roth IRA where it exempts an inherited traditional one.

That combination exists nowhere else in this series. New York and California tax the conversion and leave the inheritance alone. Florida and Texas tax neither. Pennsylvania levies a real income tax, charges nothing on the conversion, and then takes 4.5% of the account when your children receive it.

This page is built from 154 facts checked against Pennsylvania statutes, the Pennsylvania Code, and Department of Revenue instructions and guidance. 138 were independently re-verified before publication. Where Pennsylvania’s own materials disagree with each other — and on two questions they do — this page says so and shows you both.

Why the conversion costs nothing

Pennsylvania taxes eight enumerated classes of income at a single flat rate. A Roth conversion is not one of them, and the reason is structural rather than generous: Pennsylvania taxes money that leaves the retirement system, not money that moves inside it.

The Department of Revenue states the rule at form level, in the PA-40 instructions, under the heading “Roth IRA Rollover”: you do not have to pay PA tax on the difference between the amount distributed from your traditional IRA and your previous contributions, if you rolled over the entire withdrawal directly from the traditional IRA to the Roth IRA, or if you withdrew from the traditional IRA and within 60 days invested the entire amount into a Roth IRA.

There is no age condition on that. The department’s guidance addresses the early-distribution case by name, so a conversion at 45 is treated the same as a conversion at 65. That is not true in every state, and it is not true of Pennsylvania’s treatment of an early withdrawal — which is a different question, answered below.

Nor at the local level — which is the surprising part

Pennsylvania has more local income-taxing jurisdictions than any other state. Municipalities and school districts levy an Earned Income Tax; Philadelphia levies a Wage Tax. None of them can reach a conversion, because the local base is earned income and net profits.

That leaves exactly one local tax in the Commonwealth that reaches unearned income: Philadelphia’s School Income Tax. It taxes Philadelphia residents on certain investment income — and its regulations expressly exclude income earned in an individual retirement account. So a Philadelphia resident converting $100,000 owes the city nothing.

Compare New York City, where a resident’s conversion is fully exposed to a 3.876% city income tax on top of the state’s. On our New York page that combination costs a New York City resident about $11,949 on a $100,000 conversion. In Philadelphia the same conversion costs nothing at all.

Authority: 2025 PA-40 Instructions, IRA Distributions (60-day rollover rule), p.13 · 2025 PA-40 instructions (PA-40 IN 04-25) p.12, "Roth IRA Rollover"; PA DOR Answer ID 274 (updated 03/10/2026); PA PIT Bulletin 2008-01 · PA DCED Form CLGS-32-1 (04/2024) Instructions, Taxpayer Annual Local Earned Income Tax Return; Local Tax Enabling Act (53 P.S. §6924.101 et seq.); Act 32 of 2008 · Philadelphia School Income Tax Regulations §206(n) and §206(e) (consolidated Sept. 25, 2023); Philadelphia Code §19-1804 · verified 2026-07-27

The one way to make it taxable

Pennsylvania requires that the entire amount reach the Roth. The department’s caution is unambiguous: if federal tax is withheld from a rollover distribution, the withheld amount must also be reimbursed into the new IRA account for the rollover to be nontaxable for Pennsylvania purposes.

So withholding $20,000 of federal tax on a $100,000 conversion and not replacing it from other cash leaves $20,000 that never arrived. Pennsylvania taxes the shortfall to the extent it exceeds your basis — roughly $614 at 3.07%. There is no de minimis rule, and nothing in Pennsylvania’s guidance lets you make it up later out of a refund. This is the only leak, and it is entirely avoidable.

An early withdrawal is a different question, and the answer is not zero

Pennsylvania is widely described as not taxing Roth distributions at all. That is wrong in one specific case — and it is the case where the money is most likely to be needed.

A premature withdrawal from a regular IRA or a Roth IRA is taxable compensation in Pennsylvania to the extent it exceeds your previously taxed contributions, determined under the cost-recovery method, which takes contributions out first. The department states it directly for Form 1099-R code J: the taxation of a distribution from a Roth IRA before 59½ is determined under the cost recovery method.

In practice: withdraw within your basis before 59½ and Pennsylvania takes nothing. Reach the earnings and the excess is taxable at 3.07%. There is no Pennsylvania early-withdrawal penalty — California’s 2.5% has no Pennsylvania equivalent — but there is Pennsylvania tax.

One definition matters here. For an IRA, Pennsylvania’s “retirement age” is the point after which a distribution would not carry a federal early-withdrawal penalty — 59½, death or disability. Pennsylvania imposes no five-year clock of its own, so a distribution can be exempt in Pennsylvania while still being non-qualified federally.

Authority: 2025 PA-40 Instructions, pp.11–12 (taxable compensation list; IRA Withdrawals); 61 Pa. Code §101.6(c)(8)(iii) · 72 P.S. §7301 et seq. (no §72(t) analogue); 2025 PA-40 Instructions p.12 · PA PIT Guide, Gross Compensation (DSM-12, 08-2025), p.47 (criteria for eligible PA retirement plan) · PA PIT Guide, Gross Compensation (DSM-12, 08-2025), p.48; 61 Pa. Code §101.6(c)(8)(iii)(B) · verified 2026-07-27

One bracket, by constitutional design

Pennsylvania’s rate is 3.07%, and there is only one of them. That is not a policy choice the legislature could reverse next session. Article VIII, Section 1 of the Pennsylvania Constitution requires that all taxes be uniform upon the same class of subjects, and the Pennsylvania Supreme Court has long read it to forbid a graduated personal income tax — a rule the court restated as recently as September 2025.

For a conversion that has a concrete consequence: a Pennsylvania conversion can never push you into a higher state bracket, because there is no higher state bracket. No graduated schedule to climb, no supplemental tax clawing back the lower rates the way New York’s does, no millionaire surcharge. Size the conversion for federal reasons; Pennsylvania’s rate is the same either way.

One pattern is worth showing plainly, now that enough states are on the record to see it. Three of the four in the table below put a constitutional floor under the answer, and all three do it differently.

Four states, four different constitutional mechanisms

Why “does my state tax it” has a structural answer, not just a rate

State	Provision	What it actually does	Why it matters to a conversion
Pennsylvania	Art. VIII §1 — uniformity clause	Permits an income tax; forbids graduating it. “All taxes shall be uniform, upon the same class of subjects, within the territorial limits of the authority levying the tax…”	So PA has exactly one bracket. A conversion cannot push you into a higher state rate, because there is no higher state rate.
Texas	Art. VIII §24-a — outright prohibition	Bars an individual income tax entirely. “The legislature may not impose a tax on the net incomes of individuals.”	Adopted Nov 5, 2019. Four more bans followed, three of them in November 2025.
Florida	Art. VII §5(a) — conformity ceiling	Caps an income tax at what federal law allows to be credited or deducted. Bars a tax on the income of natural persons “in excess of the aggregate of amounts which may be allowed to be credited upon or deducted from any similar tax levied by the United States…”	That allowance is currently nothing, so the ceiling sits at zero — a different mechanism from Texas’s flat ban, with the same result today.
New York	No constitutional constraint	Graduated rates, plus a supplemental tax that claws the lower brackets back. —	Which is why New York is the most expensive conversion on this page, and the only one needing a two-step calculation to price.

Authority: 72 P.S. §7302; 2026 REV-413(I); PA DOR Personal Income Tax Rates table (2004–Present, 3.07%) · 72 P.S. §7302; PA Department of Revenue, Personal Income Tax · Pa. Const. Art. VIII §1; Kelley v. Kalodner, 320 Pa. 180, 181 A. 598 (1935); Amidon v. Kane, 444 Pa. 38, 279 A.2d 53 (1971); NHLPA v. City of Pittsburgh (Pa. 2025) [J-25-2025] · verified 2026-07-27

In Pennsylvania, the Roth decision is a federal decision

Here is a consequence of Pennsylvania’s rules that almost nobody explains, and it changes how a Pennsylvania resident should read the Roth question inside a workplace plan.

Pennsylvania allows no deduction going in. Not for traditional IRA contributions, and not for elective deferrals to a 401(k), 403(b) or 457 — employee contributions to a retirement plan are taxable as compensation in the year earned. The local Earned Income Tax follows suit: the standard local return lists employee contributions to retirement accounts as taxable and pensions as non-taxable.

And Pennsylvania exempts qualified retirement distributions coming out, with no dollar cap, whichever kind of account they came from.

Put those together and both routes are taxed identically by Pennsylvania. You paid 3.07% plus 1–2% locally on the way in either way, and Pennsylvania exempts the distribution either way.

One gap worth stating rather than glossing: Pennsylvania’s published guidance never names a governmental 457(b) plan as an “eligible Pennsylvania retirement plan.” The contribution side is clear, but the earnings portion of a 457(b) distribution is not unambiguously exempt. We graded that finding accordingly rather than assuming the pattern holds.

Authority: 2025 PA-40 Instructions p.12 (Contributions; Individual Retirement Accounts); 61 Pa. Code §101.6(c)(8)(ii)(B); PA PIT Guide Gross Compensation p.48 · Form CLGS-32-1 (04/2024), PA DCED Governor's Center for Local Government Services; PSERS Publication #9600 (Oct. 2024) · PA PIT Guide – Gross Compensation, DSM-12 (08-2025), 'Contributions to a Retirement Plan'; PA PIT Bulletin 2008-1 §4.1; 61 Pa. Code §101.6(c)(8) · PA PIT Guide – Gross Compensation, DSM-12 (08-2025), 'Exempt Distributions from an Employer Provided Retirement Plan' and 'Criteria for A Plan to Qualify as an Eligible Pennsylvania Retirement Pl · verified 2026-07-27

The part nobody tells you: Pennsylvania taxes your Roth at death

Pennsylvania is one of a small number of states with an inheritance tax — a tax on the person receiving, not on the estate. It has no exclusion amount and no cliff. It applies from the first dollar.

A Roth IRA does not escape it. And in one specific case Pennsylvania treats a Roth worse than a traditional IRA, which inverts the usual advice about which account to leave your children.

Why Pennsylvania taxes a Roth where it exempts a traditional IRA

The whole result turns on one clause: 61 Pa. Code §93.131(d)(2)(i)(A)

Pennsylvania’s inheritance tax asks a single question about a retirement account: could the owner have reached the money while alive? The regulation answers it with an unusual test. A right to withdraw defeats the exemption — but only where withdrawal costs a penalty or additional tax… smaller than 10% of the withdrawal.

A 10% penalty is not smaller than 10%. So the penalty that makes an early withdrawal painful is the same penalty that keeps the account out of the inheritance tax — and a Roth’s contributions, which carry no penalty at all, fall straight through it.

What is in the account	Owner’s age at death	Penalty to withdraw in life	Smaller than 10%?	PA inheritance tax
Traditional IRA	Under 59½	10% — the full §72(t) penalty	No	✓Good: Exempt. Nothing owed.
Roth IRA — your contributions	Under 59½	None — basis comes out free at any age	Yes (0%)	⚠Warning: Taxable. 4.5% to a child.
Roth IRA — your earnings	Under 59½	10%	No	✓Good: Exempt.
Either account	59½ or older	None — you could withdraw freely	Yes (0%)	⚠Warning: Fully taxable. The whole balance.
Either account	Any age, if disabled at death	None — §72(t)(2)(A)(iii) waives it	Yes (0%)	⚠Warning: Fully taxable, regardless of age.

The mechanism is worth stating plainly, because it explains why an outcome this counter-intuitive exists at all. The regulation was written to exempt retirement money the owner could not have reached during life, and it measures “could not have reached” by the size of the penalty. When it was written, a 10% penalty was what stood between an owner and their retirement account. Roth IRAs let you withdraw your contributions at any age with no penalty whatsoever — a feature everywhere else, and here the very thing that pulls those contributions into the tax base.

Where Pennsylvania’s own guidance disagrees with itself

Readers should see this rather than have it smoothed over. The Department of Revenue publishes two answers on inherited IRAs, and they do not say the same thing about a Roth.

• The one updated December 2025 says a traditional IRA is not subject to inheritance tax when the decedent is under 59½, and that for a Roth the contributions are taxable while the earnings are not — because contributions could have been removed at any time without penalty, and earnings could not.
• The one updated March 2026 says more briefly that Roth IRAs are “always taxable regardless of the decedent’s age.”

Both agree a Roth is taxable in the situation where a traditional IRA is exempt, so the inversion holds either way. What they disagree about is how much of the Roth is taxable when the owner died before 59½. We think the December answer is right, because it is the reading the underlying regulation compels — the earnings component carries the 10% penalty, and the regulation exempts exactly that. The March answer omits the carve-out rather than rejecting it, and a promulgated regulation outranks an answer-base entry in any event.

Where the authority sits is worth knowing too. The penalty-based access test is in a regulation currently in force, whose definition of a retirement plan expressly includes individual retirement accounts. What that regulation does not do is name Roth IRAs or spell out the contribution-versus-earnings split; that application appears in the department’s guidance. The governing statute says only “individual retirement accounts,” the printed Schedule G instructions say “IRAs” without distinguishing, and no Pennsylvania appellate court has addressed the question. So: stronger than an untested FAQ, short of a court holding.

Mechanics that are easy to get wrong

• The beneficiary owes it, not the estate. A Roth passes by beneficiary form rather than through the will, so the named beneficiary is liable.
• It is due at death and delinquent nine months later — while federal law lets most non-spouse beneficiaries leave the account untouched for ten years. A child can owe Pennsylvania $22,500 on a $500,000 Roth before taking a dollar out.
• Paying within three months earns a 5% discount — $22,500 becomes $21,375.
• The tax can be funded from the inherited Roth without a Pennsylvania income-tax cost, and without federal tax if the Roth is qualified.
• Gifts within one year of death are pulled back into the base, above a small per-recipient allowance.
• If the decedent was disabled at death the account is fully taxable at any age — because the federal penalty would have been waived.
• Pennsylvania has no functioning estate tax and no gift tax, and it does not reach a nonresident decedent’s Roth at all — only their Pennsylvania real and tangible property.

Authority: 61 Pa. Code § 93.131(d)(2)(i)(A); 72 P.S. § 9111(r); PA DOR Answer ID 1259; cf. Answer ID 988 · 72 P.S. §9107(c)(1), (c)(3), (c)(7); 72 P.S. §9108(c); 72 P.S. §9111(m); REV-584 brochure · 72 P.S. §9116(a)(1)–(2); PA DOR Answer ID 948 (updated 03/25/2026); REV-584 brochure · 72 P.S. §9142 (Tax Reform Code §2142, added Aug. 4, 1991, P.L.97, No.22); 72 P.S. §9143; 72 P.S. §9144(f); REV-1500 instructions; TD 10001 (July 2024) · 72 P.S. §9142; 72 P.S. §9136(d); 72 P.S. §9143; REV-584 brochure (10-22) · PA DOR Answer ID 1259 (updated 12/05/2025); REV-1510 Schedule G in · verified 2026-07-27

Creditors, bankruptcy, and the protection your children do not inherit

Pennsylvania exempts your Roth IRA from attachment and execution, and unusually, the statute names Roth IRAs expressly rather than relying on a general formulation. Two limits matter.

Contributions above $15,000 in any one-year period are outside the exemption. That figure has not moved since 2000 and is not indexed. Rollovers are excluded from the ceiling, so ordinary Roth funding — capped federally well below it — never trips it.

And Pennsylvania is a bankruptcy opt-in state, which changes the practical answer. Pennsylvania’s non-retirement exemptions are unusually thin: a $300 general monetary exemption and no state homestead exemption at all. So most Pennsylvania debtors elect the federal exemption list instead — and the federal list caps IRA protection at $1,711,975. Where Florida and Texas offer unlimited protection under their own statutes, a Pennsylvania debtor’s realistic ceiling is the federal one.

An inherited Roth is not protected, and that is settled

This is the finding that most sets Pennsylvania apart from every other state in this series. In Jones v. McGreevy the Pennsylvania Superior Court held that an inherited IRA is not exempt under the state’s retirement-account exemption, and the Pennsylvania Supreme Court denied further review.

So the question is closed. Florida protects an inherited IRA by statute. Texas names it in the statute. New York’s appellate courts are split. California is unsettled. Pennsylvania has decided — against the beneficiary.

Spousal rights, and one Pennsylvania protection that cannot help

Pennsylvania is not a community-property state, so there is no Pennsylvania analogue to the California and Texas problem where a spouse may already own half an account that carries only your name. What Pennsylvania gives a surviving spouse instead is a one-third elective share. Whether that share reaches a Roth IRA with a non-spouse beneficiary is genuinely unsettled: the statute never mentions IRAs and no Pennsylvania appellate case decides it. We left that graded low rather than picking a side.

And a well-known Pennsylvania protection that does not reach here: tenancy by the entireties shields jointly held marital property from one spouse’s individual creditors, but an IRA is necessarily owned by one person. It can never apply to a Roth IRA.

The standard exceptions apply throughout — fraudulent transfers, domestic-support obligations, and a federal tax levy, which overrides state exemptions entirely.

Authority: 11 U.S.C. §522(n), §522(b)(3)(C), §522(d)(12); Judicial Conference notice, 90 Fed. Reg. 8941–8942 (Feb. 4, 2025), effective Apr. 1, 2025 · 20 Pa.C.S. §2203(a); 20 Pa.C.S. §2210(b); 72 P.S. §9116(c) · 42 Pa.C.S. §8124(b)(1)(ix)(B) · 42 Pa.C.S. §8124(b)(1)(ix), as amended by Act 105 of 2000 (Dec. 20, 2000, P.L.742) · IRC §6334(a), (c) · In re Drake (Bankr. E.D. Pa.), citing Stauffer v. Stauffer, 465 Pa. 558 (1976) and Napotnik v. Equibank, 679 F.2d 316 (3d Cir. 1982); 11 U.S.C. §522(b)(3)(B); IRC §408(a) · In re Segen, Bankr. No. 10-14574 SR (Bankr. E.D. Pa.) (Raslavich, C.J · verified 2026-07-27

The conversion is free. The consequences are not.

Pennsylvania decided not to tax retirement money moving inside the system — and then wrote its benefit programs against a completely different definition of income. For a household near any of these thresholds, that gap is where Pennsylvania’s real cost lives.

What the conversion costs

six separate taxes, six zeroes.

PA personal income tax	$0	The converted amount is excluded outright — the 3.07% never attaches
Municipal / school-district EIT	$0	The local base is earned income and net profits; a conversion is neither
Philadelphia Wage Tax	$0	Reaches compensation, not retirement accounts
Philadelphia School Income Tax	$0	The one local tax on unearned income — and it excludes IRA income expressly
PA early-withdrawal penalty	$0	Pennsylvania has never had one
Tax Forgiveness (Schedule SP)	no effect	A nontaxable conversion is in none of the nine enumerated categories

What it can still cost you

five income tests that do not use PA taxable income.

PACENET eligibility	up to the whole benefit	The program counts the taxable amount of IRAs, so a federally taxable conversion counts — and the 2025 COLA moratorium protects only cost-of-living overages, not conversions
Philadelphia Senior Tax Freeze	the freeze, plus clawback	Counts the taxable portion of IRAs. The City checks against IRS and PA records, and a later finding of ineligibility means repaying the avoided tax with penalties and interest
Property Tax/Rent Rebate	up to $1,500	The trap that does not need a taxable conversion at all: PA counts the gross amount of an IRA distribution, “not the taxable amount”. A completely tax-free qualified Roth withdrawal counts in full against the limit ($48,110 for claim year 2025)
LIHEAP	the season’s benefit	The regulation expressly counts funds withdrawn from an IRA as unearned income
Medicaid long-term care	eligibility itself	Your own IRA or Roth is a countable resource with no payout-status escape — and a Roth has no lifetime RMDs, so nothing could establish payout status anyway

The Property Tax/Rent Rebate trap deserves singling out

Every other cliff on this page is triggered by a taxable conversion. This one is not.

Pennsylvania’s rebate program measures “eligibility income” as all income from whatever source derived, counted whether or not it is taxable, at gross amounts — with only half of Social Security included. The instructions are explicit about IRA distributions: include the gross amount, not the taxable amount.

So a qualified Roth withdrawal — tax-free federally, tax-free in Pennsylvania, absent from your PA-40 entirely — counts in full against the eligibility-income limit — $48,110 for claim year 2025, the figure governing claims filed by June 30, 2026. Crossing it costs the whole rebate, which runs up to $1,500 with the supplement. The limit has been indexed to inflation since claim year 2024 and does not adjust downward.

Whether a Roth conversion counts is a genuinely open question we will not paper over: Pennsylvania excludes IRA rollovers from eligibility income, and a conversion is a rollover into a new account — but no published guidance addresses conversions by name. If you are near the limit, that ambiguity is worth a conversation with a preparer rather than a guess.

Medicaid: no income cap, and no payout-status escape

Pennsylvania’s long-term-care Medicaid works differently from Florida’s and Texas’s, and a reader who has read about those states will otherwise assume the wrong structure. Pennsylvania is a medically needy / spend-down state with no hard income cap, so the Qualified Income Trust — the “Miller trust” that Florida and Texas require above their caps — is not the Pennsylvania mechanism at all.

On resources, Pennsylvania is strict about your own account and unusually generous about your spouse’s. Your own IRA or Roth IRA is a countable resource, and Pennsylvania grants no payout-status exclusion — which for a Roth is doubly binding, since a Roth has no lifetime required distributions and so nothing could establish payout status anyway. But the community spouse’s IRA, Roth IRA and 401(k) are excluded entirely.

Two programs a conversion cannot touch

Worth stating so nobody worries about the wrong thing: the Act 1 homestead and farmstead exclusion has no income test, and neither does Philadelphia’s homestead exemption. Occupancy is the only condition. A conversion cannot affect either.

Authority: 2025 PA-1000 instructions, Section III Lines 4 through 18; Act 7 of 2023 (PTRR expansion, income limits indexed to COLA); PA Department of Revenue, Property Tax/Rent Rebate Program · 53 P.S. § 6926.1303 ('Income', 'Household income'), def. amended Nov. 2, 2016, P.L.969, No.117 · 53 P.S. § 6926.1304(a)(4), added Aug. 4, 2023, P.L.29, No.7; cf. § 6926.704(a)(3) · 55 Pa. Code §§ 178.4(b), 178.2 ('Liquid resources'), 178.83(e); PA DHS long-term-care MA page · 72 P.S. § 3761-519(b) and § 3761-502 ('Maximum annual income'), State Lottery Law, as amended through Act 49 of 2025 · PA DHS Long-Term Care Hand · verified 2026-07-27

Moving in, moving out, and the state you left

Pennsylvania inverts the usual question. For Florida and Texas the issue is proving you left the state that taxes you. Pennsylvania has an income tax and still does not tax retirement income — so it works as a retirement destination without being a no-tax state, and the interesting direction of travel is inward.

Leaving Pennsylvania saves nothing on a conversion

This is worth stating flatly, because the instinct is so strong. Moving from Pennsylvania to Florida or Texas turns a $0 conversion bill into a $0 conversion bill. There is no Pennsylvania conversion tax to escape.

What the move does end is Pennsylvania’s inheritance-tax reach over the account. Pennsylvania taxes a nonresident decedent’s Pennsylvania real and tangible property only — intangibles, including a Roth IRA, fall outside it. That is a real reason to leave, and a completely different one from the one most people have in mind.

Coming from New Jersey is a double win on tax and a loss at death

New Jersey to Pennsylvania is a major retiree route, and the trade-off is genuinely two-sided.

On income tax, converting after the move is worth about $6,370 on a $100,000 conversion. New Jersey allows no deduction for traditional IRA contributions, so it tracks its own basis and taxes the untaxed portion on conversion — and its retirement-income exclusion disappears entirely above $150,000 of total income, with the conversion counting toward that total, so a large conversion can destroy the exclusion on your other pension income as well. Once you are a Pennsylvania resident, New Jersey cannot tax the conversion at all; its own instructions say pension, annuity and IRA withdrawal income is not taxable to nonresidents.

On inheritance tax, the move runs the other way. New Jersey exempts Class A heirs — children and grandchildren — from its inheritance tax. Pennsylvania charges lineal heirs 4.5% on the whole Roth. A New Jersey retiree moving to Pennsylvania trades a one-time conversion saving for a permanent exposure at death.

Residency mechanics, and one place the guidance is looser than the rule

Pennsylvania taxes you as a resident if you are domiciled there, or if you keep a permanent place of abode in the state and spend more than 183 days there. On the day count, the regulation counts any part of a day spent in Pennsylvania, with only a narrow allowance for passing through. Department prose elsewhere describes the count as midnight to midnight, which is more forgiving than the regulation it summarises. The regulation has the force of law, so plan against the stricter rule.

Pennsylvania has a 30-day rule and a 335-day foreign-abode rule. It has no 548-day rule — that one is New York’s, and the two are easy to mix up if you have read about both states.

Two more mechanics worth knowing:

• Reciprocity does not govern a conversion. Pennsylvania has reciprocal agreements with Indiana, Maryland, New Jersey, Ohio, Virginia and West Virginia, but they cover employee compensation only. A cross-border worker’s reciprocity says nothing about where a conversion is taxed.
• Arriving with an existing Roth costs you nothing. We went looking for a basis trap for new residents and found the opposite: Pennsylvania counts prior contributions as basis regardless of whether tax was paid to another state. A new arrival is treated the same as a lifelong resident.

And the one thing Pennsylvania still taxes after you go: an early-retirement incentive payment. Federal law protects retirement income from your former state, but a buyout is compensation, not retirement income — and Pennsylvania says these payments remain taxable to Pennsylvania even after you move out.

Authority: 2025 Form NJ-1040 instructions, Tax Rate Schedules Table A (single/MFS) and Table B (MFJ/HoH), p.64 · 2025 PA-40 instructions p.12 (IRA withdrawals and Roth IRA Rollover); PA DOR Answer ID 274; REV-584 (nonresident decedent intangibles) · 4 U.S.C. §114(a), (b)(1)(E) (P.L. 104-95); IRC §7701(a)(37); IRC §408A(a) · 61 Pa. Code §101.3(b), (d); 72 P.S. §7301(p); PA DOR "Determining Residency" · 61 Pa. Code §101.5(a); cf. PA DOR "Determining Residency" and PA PIT Guide ("midnight to midnight") · 72 P.S. §7301(p); 61 Pa. Code §101.3(a); PA PIT Guide, Brief Overview and Filing Requirements · NJ Divis · verified 2026-07-27

Where Pennsylvania is the cheapest state, and where it is the most expensive

The same account, state by state

five states verified so far · every row sourced on its own state’s page · verified 2026-07-27

	New York	California	Florida	Texas	Pennsylvania
Taxes a Roth conversion?	Yes, minus a $20,000/yr window at 59½	Yes — in full	No	No	No — at any age
How the answer is secured	Nothing structural	Nothing structural	Conformity ceiling	Outright ban	Flat rate, by uniformity clause
Rate if it did apply	4.0–10.9% + recapture	1–13.3%	—	—	3.07%, one bracket
Local tax on a conversion?	Yes — NYC 3.876%	None	None	None	None — not even Philadelphia
Taxes early Roth earnings?	Yes	Yes, + a 2.5% penalty	No	No	Yes — 3.07%, basis first
Your own Roth vs. creditors	Strong (CPLR §5205(c))	Weak — means-tested	Unlimited	Unlimited	Capped in practice at the federal figure
An inherited Roth vs. creditors	Courts split	Unsettled	Protected by statute	Named in the statute	Not protected — settled
Death tax on your Roth?	Estate tax over ~$7M	None	None	None — now barred	Inheritance tax from $1
Senior benefit cliff on a conversion?	STAR ignores conversions	Yes — $55,181 cap	Yes — $38,686 AGI cap	No — none of them	Yes — and on tax-free withdrawals too
$100,000 conversion costs	~$11,949 (NYC)	~$9,300	$0	$0	$0
$500,000 Roth to a child costs	$0	$0	$0	$0	$22,500

Eight traps

Six things people believe about Pennsylvania that are not true

Programs, plans and pending law

There is no Pennsylvania auto-Roth program yet

The Keystone Saves proposal would create a state-facilitated retirement savings program with a Roth IRA as the default account, a proposed 4% default contribution rate, and a mandate on employers with five or more employees and no existing plan. It passed the Pennsylvania House by one vote — 102 to 101 — in May 2025, and has sat in the Senate Finance Committee since.

Until it is enacted it is a bill, not a program, and nothing about it applies to any Pennsylvania employer today. If it does pass, note the trap that already bites in California and New York: the bill does not screen income, and expressly disclaims any duty to, so an auto-enrolled high earner can create an excess Roth contribution.

529 plans: Pennsylvania is a true tax-parity state

Pennsylvania deducts 529 contributions up to the federal gift-tax annual exclusion per beneficiary — $19,000 for 2026, doubled for a married couple — and unusually, the deduction is available for contributions to any state’s 529 plan, not just Pennsylvania’s. On the SECURE 2.0 529-to-Roth rollover, Pennsylvania is friendly: Act 56 of 2024 made those rollovers PA-tax-free for rollovers after July 10, 2024, leaving a narrow 2024 window in which federal and Pennsylvania treatment diverged.

One caution that reads backwards: Pennsylvania’s 529 statute contains no recapture provision, but the department nonetheless taxes the full amount previously deducted when a withdrawal is nonqualified — a clawback by administration rather than by statute.

Public employees: SERS has a Roth, PSERS has none

Pennsylvania’s public workforce is large and the answer differs sharply by system. The SERS deferred compensation plan is a governmental 457(b) with a Roth option. The State System of Higher Education offers Roth in both its 403(b) and its 457(b). Philadelphia’s municipal 457(b) includes a Roth.

PSERS — the public school employees’ system — has no Roth vehicle anywhere. Its defined-contribution plan takes voluntary contributions on an after-tax basis, but they are not Roth contributions; the only Roth references in the plan documents are to Roth IRAs as rollover destinations. A Pennsylvania teacher who wants a Roth inside a workplace plan has to use a district-sponsored 403(b) or 457. We checked this specifically because we expected the opposite.

For all of them, apply the paradox above: for a Pennsylvania resident who retires in Pennsylvania, the Roth election is a federal decision, not a state one.

Authority: 72 P.S. § 7303(a.7)(1) (Tax Reform Code § 303(a.7)(1)); PA-40 Schedule O (2025) Section I instructions; Rev. Proc. 2025-32 · 72 P.S. § 7303(a.7)(1)-(4) (full subsection reviewed; no recapture provision present) · 72 P.S. § 7303(a.7)(2)(i)(B), as amended by Act 56 of 2024 (July 11, 2024, P.L.674); SECURE 2.0 § 126 / IRC § 529(c)(3)(E) · 72 P.S. § 7303(a.7)(4)(ii) (Tax Reform Code § 303(a.7)(4)(ii)); PA-40 Schedule O (2025) Sections I and II · HB 1263 PN 1623 § 1104(a); § 102 (definitions of 'IRA' and 'Roth IRA'); § 301 · HB 1263 PN 1623 § 1113(a)(5); § 1104(a); cf. IRC · verified 2026-07-27

Marcellus royalties inside a Roth IRA

Mineral and royalty ownership is ordinary across western and northern Pennsylvania, and it is the one way a Roth IRA can end up owing income tax from inside the account. The rules are federal; their salience here is local.

Royalties received by an IRA are excluded from unrelated business taxable income. An operating working interest is not — it is a trade or business, and once gross unrelated income exceeds $1,000 the IRA itself owes tax, the custodian files the return, and the tax is paid out of the account. Debt-financed property has its own exception. And working the property yourself risks a prohibited transaction, which is a far worse outcome than a tax bill.

The Pennsylvania-specific wrinkle: a lease bonus payment is grouped with royalties in Pennsylvania’s rents-and-royalties class rather than treated as a sale of property. Inside an IRA, Pennsylvania does not tax royalty or bonus income at all while it stays in the account — income on plan assets is not includible until distributed, and after 59½ it never is. Our Texas page covers the same federal mechanics from the oil-and-gas side.

Authority: 2025 PA-40 Schedule E instructions, PA-40 E IN 04-25; 72 P.S. §7303(a)(4); PA PIT Guide – Natural Resources, DSM-12 (03-2019); Informational Notice PIT 2013-04 (Dec. 2, 2013); Tygart Resources, Inc. v. Com., 578 A.2d 86 (Pa. Commw. Ct. 1990) · IRC §4975(c)(1)(C), (c)(1)(E), (e)(1)(B), (e)(2); IRC §408(e)(2)(A) · IRC §512(b)(2), (b)(4), (b)(12); IRC §513(a); IRC §514; 2025 Instructions for Form 990-T · PA PIT Bulletin 2008-1 §6; PA PIT Guide – Gross Compensation, DSM-12 (08-2025), 'Treatment of Investment Earnings by an Eligible Pennsylvania Retirement Trust Fund'; 61 Pa. Code §101. · verified 2026-07-27

Questions people actually ask

The dataset, and how it was built

Every claim on this page comes from a dataset of 154 facts, each carrying its controlling statute, regulation or guidance document, a source URL, a verbatim quote from that source, a confidence grade, and its verification verdict. You can download the whole thing.

Research ran across five domains — state income tax and conversions, asset protection and death, state programs and benefit cliffs, residency and moving, and a Pennsylvania-specific sweep. Every domain was then re-checked by an independent adversarial pass whose instruction was to refute each claim rather than confirm it. Of 154 facts, 138 were confirmed and 19 were corrected before publication. None were left unverifiable.

Three of those corrections changed what this page says, and are worth naming:

• We had recorded that Pennsylvania’s 529 statute contains no recapture mechanism — it does not, but the department taxes previously deducted contributions on a nonqualified withdrawal anyway. We would have published a reassurance that was wrong in practice.
• We had recorded that Pennsylvania’s 529 inheritance-tax exemption might not reach out-of-state plans. The department says it does.
• We had graded the inheritance-tax finding as resting only on department guidance. It rests on a regulation currently in force, which is a materially stronger footing, and this page states it accordingly.

Where Pennsylvania’s own materials conflict, we show both and say which we think controls: the two inherited-IRA answers discussed above, and the day-count rule where department prose is looser than the regulation. Twenty-six facts are graded medium and five low — those are the ones where Pennsylvania has genuinely not answered, including whether the spousal elective share reaches a Roth IRA and whether a Roth conversion counts toward rebate eligibility income. We would rather say so than invent certainty.

One sourcing note in the interest of candour. Pennsylvania’s treatment of IRA distributions still rests substantially on a Department of Revenue bulletin issued in January 2008, which describes itself as interim guidance pending the adoption of a regulation. That regulation was never adopted — the underlying rule’s amendment history ends in January 2002 — and the bulletin is still designated as the authority by both of the department’s current publications. It is current authority by designation rather than by revision, and readers deserve to know that.

This page describes rules. It is not tax or legal advice and it does not analyse your situation. Pennsylvania’s inheritance tax and elective share intersect with estate planning in ways that depend on facts we cannot see — if the numbers here are large relative to your estate, that is a conversation for a Pennsylvania attorney or CPA. Found an error? Tell us — corrections are logged publicly in our corrections log.

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