In terms of taxes, is it cheaper to live and work in Pennsylvania or live in Pennsylvania and work in Delaware?

by David M. Lastowski, CPA | May 04, 2018
askacpaiconI make $75,000 a year. Would it be cheaper to live in Pennsylvania and work in Pennsylvania or live in Pennsylvania and work in Delaware? I’m thinking in terms of the income tax difference in each state.

Answer: If you live and work in Pennsylvania, currently the tax on an income of $75,000 is $2,303. If you live in Pennsylvania and work in Delaware, the Delaware state income tax is $3,609. Living in Pennsylvania and working in Delaware will cost you an additional $1,300 in state income tax. However, if you lived in Pennsylvania and worked in Delaware, it is likely you would not need to pay additional Pennsylvania income tax because Pennsylvania allows a credit for taxes paid to other states (in this case, Delaware) for income it also taxes.

Depending on where you live in Pennsylvania and where you work in Delaware, there may also be local income taxes to consider. You can determine your local income tax rate for the municipality and school district you live in at the Pennsylvania Department of Community and Economic Development. Living and working in different states can be complicated. You should contact a local tax professional to get a better sense of all taxes involved. To find a CPA by location and area of expertise, visit PICPA's CPA Locator

Answer By: David M. Lastowski, CPA, is the owner of David M. Lastowski, CPA, in Erie, Pa.

***Answer originally published Jan. 1, 2015.
The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
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