PA vs NJ vs DE Near Philadelphia
Living near Philadelphia in 2026, the biggest financial differences between PA, NJ, and DE come from how each combo of state income tax, Philly’s wage tax, property tax, and closing costs hits your income and price range.
1. Income taxes and the Philly wage tax
State income tax structures
Pennsylvania (PA)
Flat state income tax of 3.07% on most personal income.
Many municipalities and school districts add a local earned income tax, which can range roughly 1–2%+ depending on where you live and work.
Result: Two PA households with the same salary can pay different total local + state tax based on township/borough and workplace.
New Jersey (NJ)
Progressive state income tax with rates that rise with income; top marginal bracket is noted at 10.75% for high earners.
For middle‑ and high‑income households, effective state income tax is often higher than PA’s flat 3.07%.
Delaware (DE)
Progressive state income tax with a top marginal rate around 6.6% at higher incomes.
No local wage taxes, but overall burden depends heavily on your income level.
Philadelphia City Wage Tax – the swing factor
For anyone whose life touches the city, the wage tax is often the make‑or‑break variable.
As of July 1, 2025:
3.74% for Philadelphia residents (on wages, regardless of where you work).
3.43% for non‑residents who work in Philadelphia.
What this means in practice:
Live in Philly (any state choice is off the table—you are in PA)
If you reside in the city, you pay Philly wage tax on your wages even if you commute to the suburbs.
Your main decision becomes which neighborhood/price point, not which state.
Live outside Philly but work in Philly (PA, NJ, or DE suburbs)
You still owe 3.43% Philly wage tax on wages earned in the city as a non‑resident.
Your state choice (PA vs NJ vs DE) then layers on top of that; you may receive credits to avoid double‑taxation, but your effective total can still differ by state.
Live outside Philly and work outside Philly
Philly wage tax likely does not apply, and the comparison becomes mainly:
State income tax (flat vs progressive),
Local earned income tax (PA),
Property tax,
Commuting pattern.
This is why “Where will your paycheck be earned most of the time?” is the first planning question.
2. Sales tax and everyday spending
Sales tax is not usually the biggest driver, but it shapes your day‑to‑day costs.
Pennsylvania
State sales tax 6%; Philadelphia has an additional local add‑on (bringing combined rate around 8% in the city).
New Jersey
State rate about 6.625–6.63%, with modest local variation; average combined is listed at 6.63%.
Delaware
No state or local sales tax on retail goods.
What this means: if you spend heavily on taxable goods (furnishings, electronics, etc.), Delaware’s 0% sales tax is a real feature; many PA/NJ residents already cross the line to shop big‑ticket items there.
3. Property taxes – the real monthly swing
Effective property‑tax rates are where the three states differ most for homeowners.
New Jersey
Consistently ranked #1 highest effective property‑tax state in the country.
WalletHub and other analyses place the effective real‑estate tax rate around 2.1–2.2% of home value, with some counties effectively over 3%.
Delaware
Often in the group of lowest property‑tax states, with an effective rate around 0.47–0.5%, tied with Nevada in some rankings for 7th‑lowest.
Pennsylvania
Sits in the middle nationally; statewide effective rate roughly around 1–1.5%, but it varies sharply by county and school district.
Some suburban districts near Philly feel closer to NJ levels; others are more moderate.
What this means for the same price home:
A $500k house in:
NJ at ~2.2% ≈ $11,000/yr in taxes.
PA at ~1.3% (example mid‑range) ≈ $6,500/yr.
DE at ~0.5% ≈ $2,500/yr.
That is a difference of several hundred dollars per month between states at the same purchase price—often bigger than the payment difference from a small rate move.
4. Closing costs and transfer taxes
Pennsylvania & Philadelphia
State Realty Transfer Tax: 1% of sale price.
Many municipalities and school districts add their own transfer tax (often shared between buyer and seller).
Philadelphia specifically: total transfer tax of 4.578% for transfers after July 1, 2025, made up of 3.578% city + 1% state.
Typically split 50/50 between buyer and seller unless negotiated otherwise, but it is still a major line item at closing.
New Jersey
Realty Transfer Fee (RTF):
Paid primarily by the seller, calculated on a graduated schedule.
There are reduced rates or exemptions for certain sellers (e.g., seniors, low/moderate income), but in many standard transactions this is a seller‑side cost baked into net proceeds rather than a direct buyer charge.
Delaware
Realty Transfer Tax is typically 4% total (2.5% state + up to 1.5% local), though the state has periodically adjusted pieces and offers some exemptions (e.g., first‑time buyer relief on part of the state portion).
Customarily split between buyer and seller (often 2% each), but negotiable.
Result:
Buying in Philadelphia means planning for very high transfer tax as part of closing costs.
NJ buyers feel transfer costs more indirectly via seller pricing and net; DE buyers and sellers both need to budget for transfer tax but may benefit from lower annual property taxes going forward.
5. Quick state‑by‑state “feel” near Philadelphia
Pennsylvania – pros and cautions
Pros:
Flat 3.07% state income tax makes planning straightforward.
Wide range of Philly‑area suburbs (Montgomery, Bucks, Chester, Delaware counties) with different school districts and price points.
Middle‑of‑the‑pack property taxes overall, with some relatively moderate‑tax areas.
Watch out for:
Local earned income taxes varying by township and school district.
Philadelphia wage tax if you live or work in the city.
Best fit if you want: simple state income tax, lots of suburb choices, and you are willing to dig into local tax and wage‑tax details.
New Jersey – pros and cautions
Pros:
Certain school districts and shore‑adjacent or commuter towns can be a strong draw.
Direct access to some PATCO, NJ Transit, and turnpike/bridge corridors depending on your job location.
Watch out for:
Among the highest effective property taxes in the U.S. (~2.1–2.3% statewide, more in some counties).
Progressive state income tax that can be meaningfully higher than PA at upper incomes.
Best fit if you specifically value NJ schools or lifestyle pockets and accept that property taxes are a major long‑term cost.
Delaware – pros and cautions
Pros:
No sales tax on retail purchases.
Very low property‑tax rates (around 0.47–0.5% effective).
Some communities in northern DE (e.g., around Wilmington/Newark) offer reasonable commutes to the Philly area via I‑95 or regional rail.
Watch out for:
Progressive state income tax (up to ~6.6%)—not automatically “tax‑free.”
Commute patterns and tolls on I‑95/bridges can add time and cost.
Best fit if you prioritize low ongoing property and sales taxes and your commute and lifestyle fit DE corridors comfortably.
6. How to actually compare for your situation
A monthly, all‑in comparison works better than just thinking “state X is cheaper”:
For each short‑listed location, run:
Take‑home pay after:
State income tax,
Local/earned income tax (PA),
Philly wage tax if you live/work there.
Full housing payment at your target price:
Principal + interest,
Actual property tax from the local record,
Homeowners insurance (and any flood/hurricane coverage if near coast),
HOA/condo dues if relevant.
Typical commuting costs (gas, tolls, transit passes, parking).
Two scenarios to compare, for example:
$150k household income, $550k home, working in Center City
PA suburb vs South Jersey vs North Delaware, each with Philly non‑resident wage tax on top of their state system.
Same income and price, but job in King of Prussia (PA suburbs)
Now Philly wage tax drops out and PA vs NJ vs DE is mostly state + local income tax and property tax.
That is where “quiet winners” can emerge—often DE for low property/sales tax, or specific PA suburbs with moderate property taxes and manageable commutes.
7. Simple decision framework
Choose PA if you want:
Flat state income tax,
Many suburb options,
And you are willing to navigate local earned income tax plus Philly wage‑tax rules.
Choose NJ if you want:
Specific NJ towns/schools/transit that fit your life best,
And you accept higher property taxes as the trade‑off.
Choose DE if you want:
No sales tax,
Generally low property taxes,
And commute patterns that still work for your job and lifestyle.
Next steps
Get your equity and price range clear
If you already own, knowing your realistic value and equity is the first step to running these cross‑state scenarios:
On a short call, you can walk through target areas in PA, NJ, and DE and compare actual monthly payments using real tax records and typical closing costs for each:
Using this approach, you are not just asking “Which state is cheaper?”—you are asking “Which mix of taxes, commute, and lifestyle actually works best for my income, price range, and daily life in 2026?”
