Pennsylvania Form PA-40 Schedule B – Dividend Income (2026)
Last reviewed: 2025-11-08
Use the Pennsylvania Tax Form Calculator Form PA-40 Schedule B: Dividend Income as a stand alone tax form calculator to quickly calculate specific amounts for your 2026 Pennsylvania state tax return. Alternatively, you can use one of our Combined Federal and State Tax Estimators to quickly calculate your salary, tax, and take-home pay.
Form PA-40 Schedule B is used to report all dividend income received during 2026 that is taxable to Pennsylvania. This includes ordinary dividends, capital gains distributions, and certain foreign repatriation payments. Unlike federal returns, Pennsylvania treats dividends as a separate class of income, subject to its flat 3.07 % personal income tax. Entries must be in whole dollars.
Dividends come from corporate stock ownership, mutual fund distributions, or partnerships. Pennsylvania does not recognize federal qualified-dividend rules — all taxable dividends are treated the same. If Lines 2 through 11 are all zero (except Line 6 subtotal), the total may instead be reported directly on PA-40 Line 3 without attaching Schedule B.
Who Should File Schedule B
File this schedule if you received dividends or distributions shown on your federal Form 1040 Line 3b or Schedule B, or if you received income from a partnership or S corporation shown on PA RK-1 or federal K-1. Each spouse must complete a separate Schedule B if filing jointly and both have dividend income.
How to Complete Schedule B
Follow the line-by-line guidance below to ensure compliance with Pennsylvania rules:
- Lines 1–4 (Additions): Begin with total dividends reported federally. Include any K-1 dividends on Line 2, Pennsylvania-exempt interest dividends on Line 3, and other allowable reduction adjustments (e.g., nontaxable distributions) on Line 4. Enter descriptions for each adjustment in the fields provided.
- Line 5 & 6 (Subtotal): Add Lines 2–4 for Line 5, then subtract Line 5 from Line 1 to compute Line 6 — your preliminary Pennsylvania-taxable dividend base.
- Lines 7–11 (Additions): Include any capital gains distributions, foreign repatriation payments, and other adjustments. Line 11 should include dividend amounts from PA S corporations or partnerships per your RK-1 or federal K-1.
- Line 12 (Total): Add Lines 6, 7, 8, 9c, 10, and 11 to determine your total Pennsylvania-taxable dividend income. Transfer this amount to PA-40 Line 3.
Round all amounts to the nearest whole dollar. Do not enter cents. Pennsylvania does not recognize the federal $200 / $400 dividend exclusion or qualified dividend rate reductions.
| Taxpayer Ovals | ||
| 1 | Dividend income from Line 3b of your federal return | |
| 2 | Dividend income from federal Schedule K-1(s) | |
| 3 | Pennsylvania exempt-interest dividend income | |
| 4 | Other reduction adjustments Description | |
| 5 | Add Lines 2, 3, and 4 | |
| 6 | Subtract Line 5 from Line 1 | |
| 7 | Total exempt-interest dividends | |
| 8 | Other addition adjustments Description | |
| 9a | Repatriation of foreign income – total earnings & profits per IRC §965 statement | |
| 9b | Payments of earnings & profits in prior years included in Line 9a | |
| 9c | Payments of earnings & profits received in current year | |
| 10 | Capital gains distributions | |
| 11 | Dividend income from PA S corporations and partnerships (PA RK-1 / federal K-1) | |
| 12 | Total PA-Taxable Dividend Income (add Lines 6, 7, 8, 9c, 10, and 11). Enter on PA-40 Line 3 |
Examples
Example 1 – Mutual Fund Distributions: You received $1 ,200 in ordinary dividends and $500 in capital-gains distributions from a mutual fund. Report $1 ,200 on Line 1 and $500 on Line 10. The combined $1 ,700 will be taxed at 3.07 % as regular income.
Example 2 – Repatriation of Foreign Profits: A shareholder in a controlled foreign corporation receives $4 ,000 of repatriated earnings reported under IRC §965. The gross amount goes on Line 9a; current-year cash payments on Line 9c. These distributions are fully taxable in Pennsylvania.
Example 3 – PA S Corporation Dividends: You received a PA RK-1 showing $2 ,500 of dividend income from a Pennsylvania S corporation. Enter this on Line 11, ensuring it matches your PA-source K-1 statement. Keep a copy for your records.
Example 4 – Exempt-Interest Dividends: If a mutual fund pays dividends from Pennsylvania municipal bond interest, those are exempt. Enter them on Line 3 as a reduction.
Key Points
- Use separate Schedules B if both spouses receive dividends.
- Attach RK-1 or K-1 schedules when required.
- Do not net dividend losses against other income classes.
- Carry total from Line 12 to PA-40 Line 3.
Last reviewed: 2025-11-08: If you believe this form requires an update, please contact us.
Additional Resources
- Form PA-40 – Individual Income Tax Return
- Schedule A – Interest Income
- Official PA-40 Schedule B (PDF)
- Pennsylvania Department of Revenue – Personal Income Tax Forms
Schedule B ensures accurate reporting of Pennsylvania-taxable dividend income and alignment with PA-specific rules for partnerships, foreign distributions, and exempt interest. Proper completion minimizes audit risk and ensures your PA-40 return accurately reflects your income for 2026.
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Frequently Asked Questions
What is Form PA-40?
Form PA-40 is the Pennsylvania Individual Income Tax Return used by residents, part-year residents, and nonresidents to report taxable income and claim credits or deductions.
Can I amend to claim a refund?
Yes, if withholding or estimated payments exceeded revised liability.
Does PA tax long-term capital gains?
Yes—PA taxes “net gains from the sale, exchange, or disposition of property.” This wage page doesn’t include capital gains; model them with Schedule D.
What rate does Pennsylvania use?
Pennsylvania has a flat personal income tax rate of 3.07 % for all taxable income.
Where do I enter the exclusion amount?
You do not enter it separately; if fully excluded, you simply omit the gain from your PA-40. Partial exclusions must be shown on Schedule 19.
Important Notes
All calculations are estimates for guidance only. Always review your return and consider professional advice when submitting official filings.