Comparison•2025 Tax Year•Last verified: January 2026
New York vs Pennsylvania: Side Hustle Tax Comparison 2025
Compare New York and Pennsylvania taxes for freelancers and gig workers. PA's flat 3.07% beats NY's rates up to 10.9% - see your potential savings.
New York and Pennsylvania share a border and significant economic ties, with many workers commuting between the two states. For side hustlers in upstate New York, the Poconos region, or the Philadelphia-NYC corridor, understanding how these neighboring states compare tax-wise is crucial.
Pennsylvania offers a flat 3.07% income tax rate—one of the lowest in the nation—while New York's progressive rates climb to 10.9% at the state level, with NYC residents paying an additional 3.876% on top. The difference can be substantial for freelancers.
**Why This Comparison Matters:**
The NY-PA border sees significant cross-state activity:
- **3.07% vs up to 10.9%+**: Pennsylvania's flat rate is dramatically lower than New York's progressive system
- **No NYC tax in PA**: PA residents avoid NYC's additional 3.876% city tax entirely
- **Commuter considerations**: Many workers live in one state and work in the other
- **Cost of living**: Pennsylvania is significantly cheaper overall
- **Catskills/Poconos**: Popular NY-PA border areas for remote workers
For side hustlers, living in Pennsylvania while maintaining NYC clients could mean saving 5-10%+ on state and city income taxes.
Side-by-Side Tax Comparison
| Metric | New York | Pennsylvania |
|---|---|---|
| State Income Tax Rate | 4% - 10.9% (progressive) | 3.07% (flat) |
| NYC/City Tax | 3.078% - 3.876% | 0-3.75% (Philly only) |
| Common Rate for Side Hustlers | 5.85% - 6.85% | 3.07% |
| Federal SE Tax | 15.3% | 15.3% |
| Est. Tax on $18K Side Hustle (Upstate)* | ~$7,738 | — |
| Est. Tax on $18K Side Hustle (PA)* | — | ~$7,058 |
| Annual Savings (PA vs Upstate NY)* | — | ~$680 |
| Property Tax (Avg Rate) | 1.40% | 1.36% |
| Sales Tax | 8.52% | 6% |
*Assumes single filer with $60,000 W-2 income + $15,000 net side hustle income. Actual taxes vary based on deductions, filing status, and total income.
New York Analysis
**New York Tax Analysis for Side Hustlers**
New York has a progressive income tax system, with NYC adding substantial additional tax for city residents.
**Key New York Tax Facts (2025):**
- **Tax Type**: Progressive (9 brackets)
- **State Rate Range**: 4% to 10.9%
- **NYC Additional Tax**: 3.078% to 3.876%
- **Combined NYC Rate**: Up to 14.776%
- **Upstate Rate**: Up to 10.9% (no city tax)
**Example**: If you earn $70,000 from your W-2 job and $18,000 from side hustle income (net of expenses) in upstate New York:
- Federal SE Tax: ~$2,545
- Federal Income Tax on side income: ~$3,960
- NY State Tax: ~$1,233
- **Total Tax on Side Hustle: ~$7,738** (43.0% effective rate)
For NYC residents, add another ~$698 in city tax, bringing total to ~$8,436 (46.9% effective rate).
New York offers access to NYC's unmatched job market and cultural amenities, but the tax burden—especially for city residents—is among the nation's highest.
Pennsylvania Analysis
**Pennsylvania Tax Analysis for Side Hustlers**
Pennsylvania has a flat 3.07% income tax—one of the simplest and lowest state income taxes in the country.
**Key Pennsylvania Tax Facts (2025):**
- **State Income Tax**: 3.07% flat rate
- **Tax Type**: Flat (same rate for all income)
- **Local Income Tax**: Some localities add 1-3%+ (Philadelphia: 3.75%)
- **Filing**: Simplified with flat rate
**Example**: Same scenario—$70,000 W-2 job and $18,000 from side hustle income (net of expenses) in Pennsylvania (outside Philadelphia):
- Federal SE Tax: ~$2,545
- Federal Income Tax on side income: ~$3,960
- PA State Tax: ~$553
- **Total Tax on Side Hustle: ~$7,058** (39.2% effective rate)
**Savings vs Upstate NY: ~$680/year** on $18,000 of side hustle income.
**Savings vs NYC: ~$1,378/year** on $18,000 of side hustle income.
Note: Philadelphia residents pay an additional 3.75% city wage tax, which changes this comparison significantly.
Calculate Your Side Hustle Taxes
Use our calculator to see exactly what you'd owe in each state. Try entering your numbers, then switch between New York and Pennsylvania to compare.
Which State Is Right for Your Side Hustle?
**New York May Be Better If You:**
- Need regular access to NYC for work or networking
- Work in industries centered in New York (finance, media, fashion)
- Already have rent-stabilized housing in NYC
- Value New York's cultural amenities and urban lifestyle
- Have established professional networks in NY
**Pennsylvania May Be Better If You:**
- Can work remotely with occasional travel to NYC
- Want the lowest possible state income tax burden
- Are considering the Poconos or Lehigh Valley area
- Don't need to be in NYC or upstate NY regularly
- Want lower overall cost of living
**Important Considerations:**
1. **Philadelphia is different**: Philly's 3.75% wage tax makes it comparable to or worse than upstate NY. The PA advantage is strongest in suburbs and rural areas.
2. **Reciprocity matters**: NY and PA have tax reciprocity for W-2 wages—you pay tax to your home state. But this doesn't affect where your side hustle income is taxed (always your resident state).
3. **NYC is the big factor**: The comparison is most dramatic for NYC residents considering PA. Upstate NY vs PA is a smaller (but still meaningful) difference.
4. **Remote work opportunity**: If you can work remotely for NYC clients while living in PA, you get full access to NYC's economy without the tax burden.
5. **Sales tax favors PA**: Pennsylvania's 6% sales tax is lower than New York's 8.52%, providing additional savings on purchases.
Frequently Asked Questions
How much will I save moving from New York to Pennsylvania?
Savings depend on where in NY you're leaving. Moving from NYC to PA (outside Philly) could save $1,300-1,500+ per year on $18,000 of side hustle income due to avoiding both NY state and NYC city taxes. Moving from upstate NY to PA saves roughly $600-800 per year on the same income. Higher earners save proportionally more.
What about the Poconos area for remote workers?
The Poconos (PA) has become popular with NYC remote workers because it's close enough for occasional trips to the city (under 2 hours) while offering PA's 3.07% flat tax instead of NY's 10.9%+ rates. You get mountain lifestyle, lower cost of living, and significant tax savings while maintaining NYC client relationships.
Do I pay NY taxes if I live in PA but have NY clients?
If you're a PA resident performing work in Pennsylvania, you pay PA taxes regardless of where your clients are located. You don't owe NY tax just because your clients are in New York. However, if you physically travel to NY to perform work, those specific days may be taxable by NY.
Related Comparisons
Sources
- • New York State Department of Taxation and Finance - 2025 Tax Rates
- • Pennsylvania Department of Revenue - 2025 Tax Rates
- • NYC Department of Finance - City Income Tax Rates
- • IRS Publication 334 - Tax Guide for Small Business
- • Tax Foundation - State Tax Data 2025