Pennsylvania Pays the 8th Most Federal Tax in the United States… See Where It Comes From

Two things are constant: death and taxes. Everyone has to pay taxes for every entity, including states. States have to pay taxes, but also states receive federal funding. It’s usually an amount that is different in every state from the money from the taxes people pay. The federal government is funded from the money it gets from states, as well. 

California pays the most and unfortunately for the state, it receives less money from the federal government. Vermont, on the other hand, gets more than what they give. When it comes to Pennsylvania, they pay the 8th most federal tax in the United States. Let’s take a look at where the money comes from. If you want further information, you can look at the IRS website, as well.

Federal Taxes

Pennsylvania pays the 8th most in federal taxes. But the question that we have been asking is, where do the federal taxes that PA pays come from? The IRS has a wonderful table that outlines the different types of taxes that they collect from each state. For example, the federal government collects on individuals’ tax returns, as well as corporations’ taxes. And because the US ensures there are taxes for everything, a business or corporation’s income has to be taxed, individuals’ incomes have to be taxed, and even when someone gives another person money. There is a railroad retirement tax for those who worked in the railroad sector, too. The good thing is that those taxes are not taxable at the state level.

As the fifth most populous state, the Keystone State pays billions to the federal government, which is more than what it receives. It comes out to a total of $177,413,459,000. Given that Pennsylvania has a population of 13 million, that’s roughly about $3.34 for every federal dollar it gets in funding. Pennsylvania is a state that has a lot of industries and a lot of people, which means it generates a lot of money. Like California, it ends up paying more than what it gets.

Federal Funding

When it comes to federal funding, every single state gets it. However, the amount of federal funding that each state gets varies depending on several reasons. Sometimes, some states may not be as sufficient as others so they have to get more federal funding. For example, California and Pennsylvania are states that can sustain themselves very easily without a lot of help from the federal government. That’s why they get less than other states like Vermont. Pennsylvania’s state budget has outlined $45 billion in expenditures, but some components have not yet passed the State Legislature.

The outlined state budget would get most of its revenue from various federal funding grants, as well as state taxes collected from individuals. That’s right, each state relies on individuals and corporations to make sure there are sufficient funds to pay for highway construction, school programs, repairs, and other needed programs. There are also federal laws that get passed throughout the year, which then allocate funds to states. One such federal law that was passed to spur the economy and help out states was the American Rescue Plan. The ARP outlined $12.5 billion for Pennsylvania in 2023.

Conclusion

And there you have it, Pennsylvania pays the 8th most federal tax in the United States. It comes from a variety of taxes like business income taxes, individual income taxes, estate taxes, gift taxes, and many more. The taxes the federal government receives ensure the federal government is funded for the myriad of things that people need — from school programs, welfare programs, healthcare, and defense. Millions of people also work for the federal government and it’s because of the taxes it receives that they get paid. Pennsylvania is better off when these things are funded, that’s for sure.

Summary of Pennsylvania Federal Taxes Paid