Middletown Area School District is funded by a combination of: a local earned income tax - 1.25%; Local Services tax- Lower Swatara Township - $5 and $10 for Middletown Borough and Royalton Borough; a property tax, a real estate transfer tax 0.5%, coupled with substantial funding from the Commonwealth of Pennsylvania and the federal government. Grants can provide an opportunity to supplement school funding without raising local taxes. In the Commonwealth of Pennsylvania, pension income and Social Security income are exempted from state personal income tax and local earned income tax regardless the individual's level of wealth. The average Pennsylvania public school teacher pension in 2011 exceeds $60,000 a year plus they receive federal Social Security benefits: both are free of Pennsylvania state income tax and local income tax which funds local public schools.