Students interested in this college are also interested in: Colorado State University, University of Washington, University of California, Berkeley, University of Oregon, University of California, Los Angeles, University of California, Santa Barbara. Overview.
These plans areexcluded from tax on your federal return, but not onyour state income tax return. Once you retire and beginto receive pension benefits, you will pay federal tax onyour retirement payments, but you will not pay PA taxon those benefits.
Pennsylvania is a fairly tax-friendly state. Most retirement income â Social Security, federal, state and local pension income â is not taxed. And interest, dividends and capital gains are subject only to a tax at 3.07%. But at 10.3%, the Keystone Stateâs overall tax burden is fairly high compared with most other tax-friendly states.