Pennsylvania sales tax: rates, nexus & PA-3 filing

$100,000 in cumulative gross sales into Pennsylvania during the previous 12-month period — sales only, no transaction-count test. PA adopted economic nexus in 2019 following Wayfair. Once you cross $100,000, register with the PA Department of Revenue for a Sales, Use, and Hotel Occupancy Tax license and begin collecting on subsequent sales.

Pennsylvania's state rate is 6.00%. Only two localities add to it: Allegheny County (Pittsburgh) adds 1% for a combined 7%, and Philadelphia adds 2% for a combined 8%. Everywhere else in PA is a flat 6%. This makes PA the simplest combined-rate state in the Northeast — no thousands of local-rate combinations like Washington or Illinois, just three rate tiers.

Yes. Pennsylvania treats prewritten software (canned software) as taxable tangible personal property regardless of delivery method — physical, downloaded, or remotely-accessed. SaaS is therefore taxable. Custom software is exempt. Digital products (ebooks, music downloads, streaming) became taxable in August 2016 under Act 84 of 2016. PA is one of the most SaaS-unfriendly states for software vendors.

PA is a destination-sourcing state. The rate is determined by the buyer's location. For ship-to addresses in Allegheny County, charge 7%; for Philadelphia, charge 8%; everywhere else in PA, charge 6%. Drop-ship transactions key on the customer's ship-to. The simplicity of three rate tiers makes the rule unusually clean for SMB sellers.

Pennsylvania requires marketplace facilitators with $100,000+ in PA sales to collect and remit on behalf of third-party sellers. Amazon, Etsy, eBay, Walmart, and Shopify Markets in PA are facilitators. Sellers still need to register for a license and file returns showing the marketplace sales as a deduction, but do not remit tax on those transactions. Direct sales through your own site need full collection and remittance once you cross nexus.

The PA DOR assigns frequency by liability: monthly if quarterly liability exceeds $600 (most active sellers), quarterly for $300–$600, semi-annually for under $300. Monthly and quarterly returns are due the 20th of the month following the period. Pre-payments are required for taxpayers whose actual tax liability for the third quarter of the previous year exceeded $25,000 — they prepay on the 20th of the second month of each quarter.

PA has a 6% use tax (plus the 1% Allegheny or 2% Philadelphia local where applicable) on taxable goods bought from out-of-state vendors without PA sales tax. The DOR is aggressive on use-tax audits — they cross-reference Pennsylvania income-tax returns (PA-40 Schedule W) where taxpayers self-report use tax, with Department of Revenue data. Businesses report use tax on the same PA-3 sales tax return.

(1) Treating SaaS as exempt — PA is one of the SaaS-taxable states even though the 'tangible personal property' framing seems to suggest otherwise. (2) Missing the Philadelphia 2% or Allegheny 1% local on ship-to addresses in those counties. (3) Forgetting Pennsylvania's exemption on clothing — PA is one of only 4 states that fully exempt clothing, and selling clothing with sales tax is a refund liability. (4) Missing the 20th-of-month deadline. (5) Skipping the use-tax line on PA-3 when buying equipment from out-of-state vendors.