Pennsylvania Sales Tax on Invoices: A Practical Guide
Last verified: · Verify with the Pennsylvania Department of Revenue before relying on a specific rate.
Pennsylvania's sales tax framework is simpler than most large states — only three possible combined rates (6%, 7%, 8%), broad service exemption, and a low $100K economic-nexus threshold. The two complications worth understanding: SaaS is taxable in PA (since 2016), and the digital products / canned software treatment is broader than in many neighboring states.
The headline rate
Pennsylvania's state sales tax is 6.0%. Local additions are limited to two jurisdictions:
- Allegheny County (Pittsburgh): +1.0% for a 7.0% combined rate
- City of Philadelphia: +2.0% for an 8.0% combined rate
- Rest of Pennsylvania: 6.0% state only
Do you need to register?
PA-based businesses selling taxable goods or services must register for a PA Sales Tax License before making taxable sales.
Out-of-state sellers must register and collect PA sales tax once they exceed $100,000 in Pennsylvania salesin the previous calendar year (no transaction-count threshold). PA's low threshold catches more out-of-state sellers than $500K states.
What's taxable, what isn't
Pennsylvania taxes tangible personal property and a relatively narrow list of services. Notable for invoicing:
- SaaS and digital products: taxable since August 2016. Cloud computing, downloaded software, streaming services, and digital books/music/video are all taxed at the combined rate of the customer's location.
- Most professional services: NOT taxed. Accounting, legal, consulting, design, copywriting, photography services, freelance work — all exempt.
- Repair and maintenance of tangible personal property: often taxable.
- Lawn care and landscaping: taxable with limited residential exemption.
Frequently asked questions
What is Pennsylvania's state sales tax rate?
Pennsylvania's state sales tax rate is 6.0%. Two local jurisdictions add their own rates on top: Allegheny County (which includes Pittsburgh) adds 1% for a 7% combined rate, and the City of Philadelphia adds 2% for an 8% combined rate. The rest of Pennsylvania is at the 6% state rate only — no county-level sales tax outside Allegheny and Philadelphia. This makes PA's combined rate framework simpler than most large states (just three possible rates: 6%, 7%, or 8%).
What's Pennsylvania's economic nexus threshold?
Pennsylvania requires out-of-state sellers to register and collect Pennsylvania sales tax once they have $100,000 or more in Pennsylvania sales in the previous calendar year. There's no transaction-count threshold (PA uses dollar threshold only). Pennsylvania's threshold is among the lower thresholds in the nation, catching more out-of-state sellers than $500K-threshold states like California and Texas.
Is SaaS taxable in Pennsylvania?
Yes. Pennsylvania has taxed SaaS, cloud computing, and most digital products since August 2016, when the state expanded the definition of 'tangible personal property' to include canned software accessed through a remote location. SaaS subscriptions are taxable at the combined sales tax rate of the customer's location (6%, 7%, or 8% depending on whether the customer is in Allegheny County, Philadelphia, or elsewhere in PA). Custom software developed for a single customer remains exempt. PA Bulletin SUT 19-001 provides the operational guidance.
Does Pennsylvania tax services?
Generally no. Pennsylvania exempts most professional and personal services — accounting, legal, consulting, design, photography services, freelance work, and most other services are not taxed. Specifically taxable services include: lobbying services, premium cable / satellite TV, certain repair and maintenance services on tangible personal property, lawn care and landscaping (with limited residential exemption), and digital products. PA's 'enumerated services' list is shorter than New York's or Texas's.
How do I claim a Pennsylvania resale exemption?
B2B sales to PA-registered resellers can be exempt with a valid PA Exemption Certificate (REV-1220) on file. The seller retains the certificate and applies zero tax on qualifying sales. The invoice should reference the buyer's PA Sales Tax License Number and note 'Sale for resale; REV-1220 on file.' PA also accepts the multistate Streamlined Sales Tax (SST) Exemption Certificate for sellers registered in multiple states.
Where can I verify Pennsylvania sales tax rates and rules?
Pennsylvania Department of Revenue at revenue.pa.gov — the official tax authority. Look for: REV-227 (Pennsylvania Sales and Use Tax Credit Chart), the Sales Tax page with current local rate updates, PA Bulletins for recent rule changes, and the PA Tax Update newsletter. The DOR's Online PA-100 system handles registration and ongoing filings.
Sources
This page is general information, not tax advice. For specific transactions, consult a Pennsylvania-licensed CPA or request a private letter ruling from the PA DOR.