Pennsylvania Form PA-40 Schedule O – Other Deductions (2026)
Last reviewed: 2025-11-08
Use the Pennsylvania Tax Form Calculator Form pennsylvania: Pennsylvania Form PA-40 Schedule O – Other Deductions (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 O is used to report deductions permitted under Pennsylvania tax law that are not claimed elsewhere on your return. These deductions include contributions to Health Savings Accounts (HSA), 529 education savings plans, ABLE disability savings plans, and certain retirement contributions. All amounts should be entered in whole dollars, and the total deduction transfers to PA-40 Line 8. Pennsylvania does not allow federal itemized deductions, so this schedule is the only means to reduce taxable income beyond direct exclusions.
To qualify, contributions must have been made with after-tax dollars and within the tax year 2026. Employer-paid contributions are not deductible. Documentation should include contribution statements, bank records, or confirmation from the program administrator.
How to Complete Schedule O
Follow these instructions for each deduction category:
- Lines 1a–3 (HSA/MSA Deductions): Enter contributions you or your spouse made to a qualified Health Savings Account (HSA) or Medical Savings Account (MSA). Employer-funded contributions are excluded. Add Lines 1a through 2 to compute the total on Line 3.
- Lines 4a–5 (Education Savings): Contributions to the Pennsylvania 529 College Savings Plan and PA ABLE Program are deductible. You may deduct up to $18,000 per beneficiary ($36,000 if filing jointly) for 2026. Add these contributions and enter the total on Line 5.
- Lines 6a–8 (Retirement and Other Deductions): Include voluntary contributions to traditional IRAs, SEP, or Keogh plans that meet Pennsylvania’s rules. Contributions to Roth IRAs are not deductible. You may also list other allowable items, such as military pay deferrals or employee contributions to non-qualified deferred compensation plans, on Line 7. Add Lines 6a through 7 for the subtotal on Line 8.
- Lines 9–10: Total all deductions and enter the final allowable deduction on Line 10. Transfer this figure to PA-40 Line 8 to reduce your taxable income subject to the 3.07% Pennsylvania flat tax rate.
Only contributions made by the taxpayer or spouse may be claimed. Do not include rollovers or employer matches. If you withdraw from a 529 or ABLE account for non-qualified purposes, those amounts may later be taxable to Pennsylvania.
| Health Savings Accounts and Medical Savings | ||
| 1a | HSA contributions made by taxpayer | |
| 1b | HSA contributions made by spouse | |
| 2 | Medical Savings Account contributions (MSA) | |
| 3 | Total HSA/MSA deductions (add Lines 1a–2) | |
| Education Savings (529 and ABLE Accounts) | ||
| 4a | Contributions to Pennsylvania 529 College Savings Plan | |
| 4b | Contributions to Pennsylvania 529 ABLE Program (disability savings) | |
| 5 | Total Education Savings Deductions (add Lines 4a + 4b) | |
| Retirement and Other Allowable Deductions | ||
| 6a | Contributions to PA-eligible retirement plans (traditional IRA, Keogh, SEP) | |
| 6b | Employee contributions to deferred compensation plans (not included in wages) | |
| 7 | Other allowable deductions (attach statement) | |
| 8 | Total Other Deductions (add Lines 6a–7) | |
| 9 | Total Allowable Deductions (add Lines 3 + 5 + 8) | |
| 10 | Total deductions applied to Pennsylvania taxable income (transfer to PA-40 Line 8) | |
Examples and Scenarios
Example 1 – Health Savings Account: You contributed $3,000 to your personal HSA, and your spouse added $1,500 to theirs. Enter $3,000 on Line 1a, $1,500 on Line 1b, total $4,500 on Line 3. If your employer also contributed $500, that amount is excluded from your deduction because it was pre-tax.
Example 2 – 529 Education Plan: You contributed $5,000 to your child’s Pennsylvania 529 College Savings Plan. Enter $5,000 on Line 4a. The entire amount is deductible even if the account is for a nonresident beneficiary, provided the plan is a Pennsylvania-sponsored 529.
Example 3 – ABLE Program: You contributed $2,000 to a PA ABLE disability savings account for your sibling. You may deduct that contribution as long as the account is registered under the Pennsylvania ABLE Program. Enter $2,000 on Line 4b.
Example 4 – IRA Contribution: You contributed $6,000 to a traditional IRA. Enter this on Line 6a. Do not include Roth IRA contributions or rollover amounts, as they are not deductible for Pennsylvania tax purposes.
Example 5 – Multiple Deductions: If you contributed $4,500 to HSAs, $5,000 to a 529 plan, and $6,000 to an IRA, your total deduction (Line 10) is $15,500. The tax savings at the 3.07% state rate equals approximately $476.35.
Tips for Compliance
- Keep confirmation receipts or contribution statements from all plans.
- Do not double-count contributions that were made through payroll deductions.
- Withdrawals from HSAs or 529s used for non-qualified expenses are taxable in the year of withdrawal.
- Ensure you have not claimed the same deduction federally and on Schedule O if the contribution was pre-tax.
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
- PA 529 College and Career Savings Program
- Pennsylvania ABLE Savings Program
- Official PA-40 Schedule O (2024 PDF)
Schedule O ensures that Pennsylvania residents can correctly claim qualified deductions like HSAs, 529s, ABLE accounts, and retirement contributions to reduce taxable income under the 3.07% state income tax rate.
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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.