Distributions from a qualified pension plan are excluded from PA taxable income.
From the PA website:
Certain items are excluded from the definition of taxable compensation. These items include, among other things:
- Income received for active duty military service outside the Commonwealth of Pennsylvania;
- Income received for active State duty for emergency within or outside the Commonwealth of Pennsylvania;
- Periodic payments for sickness and disability other than regular wages received during a period of sickness or disability;
- Disability, retirement or other payments arising under workmen's compensation acts, occupational disease acts and similar legislation by any government;
- Payments commonly recognized as old age or retirement benefits paid to persons retired from service after reaching a specific age or after a stated period of employment;
- Public assistance or unemployment compensation payments by any governmental agency;
- Payments to reimburse actual expenses;
- Personal use of an employer's owned or leased property or of employer-provided services; or
- Compensation does not include guaranteed payments to a partner even if they are for services.
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