If 59½ years of age, but did not retire, IRA distributions must be reported on a cost recovery basis until retirement. If retired, but did not reach age 59½, distributions must be reported on a cost recovery basis until age 59½ is reached.
The cost recovery method is a way to determine how much of a distribution from a retirement plan or annuity is taxable.
For more information: 2023 Pennsylvania Personal Income Tax Return Instructions
TurboTax tells us the same thing, its link to find out more takes us to this post. It would be helpful to know how to calculate/determine this number. A link to the PA Department of Revenue is not a helpful tool.
Your cost basis is how much you paid in. Take a look at this information. You can see What is the cost recovery method referred to in PA instructions states:
What is the cost recovery method referred to in the personal income tax instructions?
The cost recovery method is a way to determine how much of a distribution from a retirement plan or annuity is taxable. Under the cost recovery method, an individual "recovers" all of his or her contributions to a retirement plan, before reporting any PA taxable income.
For example, if you contributed $200 a month for 80 months to a qualifying pension plan, you contributed $16,000 to the plan. If you took a lump sum distribution of $20,000 before you were qualified to retire, only $4,000 would be taxable. Based on the cost recovery method, the first $16,000 of the distribution was your own money, leaving only $4,000 as taxable.
If you recover all your contributions, and still have not reached the age of 59½, then any subsequent withdrawals are taxable until you reach the age of 59 1/2.
Gross Compensation - PA Department of Revenue shows taxable, non-taxable and the iffy income.