We are a Naperville, Illinois CPA firm and we serve Philadelphia-area clients remotely; we have no Pennsylvania office. Philadelphia is unusual among large American cities because it taxes wages, self-employment profit and gross receipts at the city level, in addition to Pennsylvania's flat income tax. If you work, live or run a business in Philadelphia, the filings below may all apply.
The Philadelphia wage tax
Employers must withhold the wage tax from Philadelphia residents and from nonresidents who work in the city. Recent rates:
| Effective date | Resident | Nonresident |
|---|---|---|
| July 1, 2026 | 3.735% | 3.425% |
| July 1, 2025 | 3.74% | 3.43% |
| July 1, 2024 | 3.75% | 3.44% |
Pennsylvania employers register with the city within 30 days of hiring a Philadelphia resident or a nonresident who works in the city. Filing frequency depends on how much tax you withhold: quarterly below $350 a month, monthly from $350 to $16,000 and more often above that. Returns are filed through the Philadelphia Tax Center, since paper returns are no longer accepted, and the fourth-quarter return now serves as the annual reconciliation. For 2026 the quarterly due dates are April 30, July 31, October 31 and February 1, 2027. Our payroll services and our guide to local payroll taxes explain how employers handle this.
Net Profits Tax and BIRT
Self-employed people, partners and members of LLCs owe the Net Profits Tax on business profit. For tax year 2025 the rates were 3.74% for city residents and 3.43% for nonresidents who conduct business in the city, and some low-income filers can qualify for a reduced 1.5% rate. The return is due April 15, with estimated payments on April 15 and June 15. Corporations are not subject to it.
The Business Income and Receipts Tax, or BIRT, is a separate tax on businesses. For tax year 2025 it was 1.410 mills on gross receipts (about $1.41 per $1,000) plus 5.71% on taxable net income, and both parts must be reported. Since tax year 2025 there is no longer a $100,000 exemption. You may have to file even if you had no profit, and an out-of-city business with at least $100,000 of Philadelphia gross receipts in any 12-month period is treated as having nexus. A credit for the net income part of BIRT may reduce your Net Profits Tax, but you still must file a return.
Pennsylvania and neighbors
Pennsylvania's 3.07% income tax reaches residents and nonresidents with Pennsylvania-source income, and it covers some entities taxed as pass-throughs. New Jersey residents who work in the city also pay the nonresident wage tax. Outside the city, local earned income taxes work differently, so tell us where you live and work. Our Pennsylvania page has more on state rules.
The community
The Philadelphia metro area has about 148,000 residents who identify as Asian Indian alone or in combination (roughly 2.4%), and the city itself has about 25,900 (1.6%) according to the American Community Survey for 2020 to 2024. We help families and small employers with the US-India tax treaty and with payroll and bookkeeping for small business owners.
How we can help
We can review which city taxes you owe, prepare Net Profits Tax and BIRT returns with your Pennsylvania and federal filings, and run payroll with the right Philadelphia withholding. See also our business tax preparation page. For decisions about your own taxes, consult a qualified professional.
Frequently asked questions
What is the Philadelphia wage tax rate?
From July 1, 2026, it is 3.735% for residents and 3.425% for nonresidents who work in the city. The rates are scheduled to decline over time.
Do I owe the Net Profits Tax if I own an S corporation?
Corporations themselves are exempt from the Net Profits Tax, but how owners of S corporations and other pass-throughs are treated depends on the facts. Review your structure with a professional.
When is the BIRT return due?
April 15 for the previous calendar year, so April 15, 2026 for tax year 2025.
Does a business with no profit have to file BIRT?
Yes, in most cases. The city says to file even if you had no profit.
Official sources
- City of Philadelphia: Wage Tax for employers
- City of Philadelphia: Business Income and Receipts Tax
- City of Philadelphia: Net Profits Tax
- Pennsylvania Department of Revenue: personal income tax
- U.S. Census Bureau: ACS 2020-2024 5-year, Table B02018 (Philadelphia metro area and city)
This page is a plain-language summary. The official source controls if there is any difference.
General information only, not tax, legal or accounting advice for your situation. Rules, limits and deadlines change; confirm the current rules with the official source or a qualified professional before you act. Reading this page does not create a professional relationship with CPA Tax Payroll and Accounting Corp.