Reduced Philadelphia Business Taxes Effective July 1, 2018

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Starting July 1, 2018 the City of Philadelphia has a new reduced local tax structure.  It impacts local businesses, employees and residents as follows:

City Wage Tax (applies to all businesses that operate within the City limits or hire Philly residents)

  • 3.8809% city wage tax for Philadelphia residents
  • 3.4567% for non-residents

All paychecks issued by businesses after June 30, 2018 must comply with the new withholding rates.  Be sure to notify your HR department of payroll company to avoid needless headaches down the road.

Earnings Tax

  • 3.8809% earnings tax for Philadelphia residents
  • 3.4567% for non-residents

The earnings tax is essentially the same as the City Wage Tax.  The City Wage Tax is withheld by your employer.  If your employer does not withhold the City Wage Tax however, it is still the responsibility of the individual to pay this tax directly to the City – the City Earnings Tax.

Net Profits Tax and School Income Tax

  • 3.8809% for Philadelphia residents
  • 3.4567% for non-residents

Only residents of Philadelphia are responsible for the School Income Tax.

For more information directly from the Department of Revenue, click here.

Douglas Leavitt is an attorney with Danziger Shapiro & Leavitt and focuses his practice on guiding business with their daily operational needs.  Please feel free to contact him or any of the other attorneys at Danziger Shapiro & Leavitt to discuss how this new change will affect your business or any other issue you may have that concerns you and your business.

This entry is presented for informational purposes only and does not constitute legal advice.

 

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