Sales and Use Taxes in Pennsylvania

April 13, 2006

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In Pennsylvania an excise tax at the rate of 6 percent is imposed upon the sale at retail and the use within the state of tangible personal property. This sales tax includes, but is not limited to, goods, wares, and merchandise. The rental of hotel, motel, inn, tourist home, lodging or rooming house accommodations for less than 30 consecutive days is also taxable.

Sales and use tax rate. The Pennsylvania sales and use tax rate is 6 percent of the sales price on the state level. Check with your local governments in Pennsylvania because they are allowed to assess a local sales and use tax. Generally, all sales are taxed at the 6 percent sales tax rate. The sales tax applies to the gross receipts from all of the following services:

repairing, altering, mending, pressing, fitting, dyeing, laundering, dry-cleaning, or cleaning tangible personal property other than clothing or footwear
applying or installing tangible personal property as a repair or replacement part of other tangible personal property
labor or services billed by the vendor for delivering, installing, or applying tangible personal property sold by the vendor even if such services are contracted for separately
inspecting, altering, cleaning, lubricating, polishing, repairing, or waxing motor vehicles
printing or imprinting tangible personal property for persons furnishing the materials used in such operations
lobbying services
adjustment services, collection services, or credit reporting services
secretarial or editing services
disinfecting or pest control, building maintenance, or cleaning services
employment agency services or help supply services
lawn-care services
self-storage services

Tax exempt items. Pennsylvania includes many specific items that are exempt from sales tax. Examples of exempt items are certain food products and prescription medication. You'll want to check and see if you're exempt from the tax.

Responsibility for paying sales tax. The Pennsylvania sales and use taxes are collected by vendors from purchasers and paid over to the state of Pennsylvania. If use tax is not paid to a vendor, the purchaser must pay it to the state.

Use tax. The use tax is imposed on you if you purchase taxable tangible personal property or services outside of Pennsylvania and subsequently use the taxable item in Pennsylvania. The use tax is also incurred by you as a purchaser of taxable tangible personal property or services if you do not pay a vendor the required sales tax.

Obtaining tax permits in Pennsylvania. If you are going to be a Pennsylvania seller you must apply for a license with the Department of Revenue before beginning business. If you maintain more than one place of business, a license is issued by the state for the principal place of business. You must display a copy of the license at additional places of business. A license is permanent and no fee is charged.

Leases. Generally, the leasing or rental of tangible personal property in Pennsylvania is a sale subject to the sales and use taxes. Where a lease agreement involves an option to buy, sales tax is applicable to lease payments as well as any payment made in exercising the option to buy.

The following discussions address additional sales and use tax issues that many small business owners face: