Pennsylvania Form PA-40 Schedule E – Rents and Royalties (2026)
Last reviewed: 2025-11-08
Use the Pennsylvania Tax Form Calculator Form pennsylvania: Pennsylvania Form PA-40 Schedule E – Rents and Royalties (2026) 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 E reports income or loss from rents and royalties earned during 2026. This includes residential and commercial rental properties, mineral rights, oil and gas leases, timber royalties, and intellectual property such as patents or copyrights. All figures must be entered in whole dollars, and your net income is taxed at Pennsylvania’s flat 3.07% rate. If you own multiple properties, you must file a separate Schedule E for each one.
Income from Pennsylvania properties is fully taxable to residents and nonresidents alike. Nonresidents must allocate income earned in Pennsylvania using Schedule NR. Each property’s gross income and directly related expenses should be itemized clearly.
How to Complete Schedule E
Use the following instructions for each section of the form:
- Property Information: List each property or royalty source by address or description. For jointly owned property, enter your ownership percentage on Line C.
- Line 1: Enter total gross rents or royalties received before expenses.
- Lines 2–16: Enter allowable expenses, such as maintenance, property taxes, management fees, and depreciation. All expenses must be directly related to the income-producing activity and properly documented.
- Line 17: Adds all expenses from Lines 2–16.
- Line 18: Calculates net profit or loss by subtracting total expenses from gross income.
- Line 19: Applies your ownership percentage to determine the portion attributable to you.
- Line 20: Shows your total Pennsylvania-taxable rental or royalty income. Transfer this amount to PA-40 Line 6.
Keep all supporting documents such as lease agreements, royalty statements, and depreciation schedules for at least four years. Expenses claimed without documentation may be disallowed during review.
| Property Details | ||
| A | Description and location of property | |
| B | Type (Residential, Commercial, Mineral, Royalty, etc.) | |
| C | Ownership percentage (if joint) | |
| Income | ||
| 1 | Gross rents or royalties received | |
| 2 | Advertising | |
| 3 | Auto and travel | |
| 4 | Cleaning and maintenance | |
| 5 | Commissions | |
| 6 | Insurance | |
| 7 | Legal and professional fees | |
| 8 | Management fees | |
| 9 | Mortgage interest paid to banks | |
| 10 | Other interest | |
| 11 | Repairs | |
| 12 | Supplies | |
| 13 | Taxes | |
| 14 | Utilities | |
| 15 | Depreciation expense | |
| 16 | Other (list) | |
| 17 | Total expenses (add Lines 2 through 16) | |
| 18 | Net income or (loss) (Line 1 − Line 17) | |
| 19 | Portion taxable to Pennsylvania (ownership %) | |
| 20 | Total PA-taxable rent/royalty income (Line 18 × Line 19 ÷ 100). Enter on PA-40 Line 6 | |
Examples and Scenarios
Example 1 – Residential Rental: You rent out a property in Harrisburg for $1 200 per month. Annual rent = $14 400. Expenses total $3 900, including taxes, insurance, and maintenance. Net profit = $10 500, taxed at 3.07%, or $322.35.
Example 2 – Royalty Income: You receive $5 000 from natural gas extraction on land you own 50 %. Report $5 000 on Line 1 and ownership at 50 %. The PA-taxable portion is $2 500 × 3.07%, or $76.75 tax.
Example 3 – Short-Term Rental: You earn $9 000 through a short-term rental platform and spend $2 000 on cleaning, platform fees, and advertising. Net profit = $7 000. Pennsylvania taxes all rental income at the same rate—there is no distinction between long-term and vacation rentals.
Example 4 – Loss Scenario: If your expenses exceed income, report the loss on Line 18. However, the loss may only offset other rental or royalty income within the same income class and cannot reduce wages or business income.
Important Notes
- All rental and royalty income is taxed at 3.07% with no preferential rates.
- Losses may not offset income from other classes (such as wages or dividends).
- Do not combine income from multiple properties—each requires its own Schedule E.
- Royalty income includes payments for oil, gas, timber, or mineral extraction rights.
- Passive-activity rules under federal law do not apply to Pennsylvania tax reporting.
Last reviewed: 2025-11-08: If you believe this form requires an update, please contact us.
Further Guidance and Resources
- Form PA-40 – Individual Income Tax Return
- Schedule C – Business or Profession Income
- Official PA-40 Schedule E (2024 PDF)
- Pennsylvania Department of Revenue – PIT Forms and Instructions
Schedule E helps taxpayers accurately calculate and report Pennsylvania-taxable rental and royalty income, ensuring proper application of the 3.07% state income-tax rate and compliance with Commonwealth reporting rules.
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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.