Gov. Tom Wolf’s 2021-22 budget proposal contains the largest increase in education spending Pennsylvania has ever seen along with a sizable increase in the state’s personal income tax rate. While the governor is proposing to raise the income tax for the first time in nearly two decades, some of the new money would be directed to provide tax relief for lower income families and some tax-shifting at the local level. According to sources, the governor will be proposing hiking the 3.07% personal income tax rate rise to 4.49%, starting July 1. That would be the first time it has increased since 2003. An increase of that size in the personal income tax would raise more than $3 billion annually. There are nine states with flat tax rates like Pennsylvania currently range from 3.07% in Pennsylvania to 5.25% in North Carolina. With this proposed increase, it would push Pennsylvania into the seventh spot out of nine with only Indiana at 3.23% and Michigan at 4.25% being lower.

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Source: PennLive, Feb. 2, 2021.