April 15 and June 15
of each year
For Tax Year 2017:
3.8907% of net profits (Resident)
3.4654% of net profits (Non-resident)
Who pays the tax
The Net Profits Tax (NPT) is imposed on the net profits from the operation of a trade, business, profession, enterprise, or other activity by:
- Philadelphia residents, even if their business is conducted outside of Philadelphia.
- Non-residents who conduct business in Philadelphia.
Businesses must pay the Net Profits Tax if they are organized as:
- Individuals (sole proprietors).
- Limited liability companies (LLCs).
- Estates or trusts.
The rental of property, in most cases, is considered the operation of a business.
A return must be filed even if a loss is incurred. If no return is filed, non-filer penalties are imposed.
Note that the NPT does not take the place of the net income portion of the Business Income & Receipts Tax (BIRT). However, you may be able to take a credit on the NPT based on the amount of tax owed from your BIRT.
If you must amend an NPT return, complete a new tax return with the updated amount. Place an “X” in the box that indicates the form is an amended return.
Paperwork for the Net Profits Tax is filed annually, but payments for the current year’s estimated tax are due twice per year. The first payment is due April 15 of each year, and the second installment is due by June 15. Each payment must equal 25% of the prior year’s Net Profits Tax.
You must file a return even if your business has an overall loss and no tax is due.
Tax rates, penalties, & fees
How much is it?
For Tax Year 2017:
3.8907% for Philadelphia residents
3.4654% for non-residents
For Tax Year 2016:
3.9004% of net profits (Resident)
3.4741% of net profits (Non-resident)
For Tax Year 2015:
3.9102% of net profits (Resident)
3.4828% of net profits (Non-resident)
What happens if you don't pay on time?
Payments made after the original due date are subject to interest and penalty charges.
There are no extensions for tax payments, but you can apply for an extension if you need more time to file your return. You can get a 60-day extension (until June 15) by filing an extension payment coupon. You must visit our payments website to print a customized extension payment coupon.
If you have obtained a federal extension (i.e., six months), you will be granted additional time to file the Net Profits Tax (NPT). The extension period to file the NPT return cannot exceed the end date of the federal extension period.
Discounts & exemptions
Are you eligible for a discount?
To qualify to pay the reduced income-based rates for Net Profits Tax, you must be eligible for Pennsylvania’s Tax Forgiveness Program. This program is available to working families who have paid income tax throughout the year and meet certain income eligibility requirements based on household size and marital status.
Reduction amount (Tax Year 2016)
The income-based rates are 0.5% lower than the standard rates.
Reduced rates for residents
Reduced rates for non-residents
How to apply the reduction
You must attach a completed Pennsylvania Schedule SP for tax year 2016 to your Net Profits Tax return to be eligible to receive the income-based rates. The City of Philadelphia will check to make sure your Schedule SP matches the state’s records.
Non-Pennsylvania residents who work in Philadelphia but do not file a Pennsylvania income tax return must include a signed copy of their state income tax return to be eligible for the income-based rates.
Can you be excused from paying the tax?
Corporations are exempt from the Net Profits Tax.
How to pay
File and pay online
You can file NPT returns and make payments through the City’s eFile/ePay site. Starting with payments due in April 2018 for Tax Year 2017, taxpayers who owe $5,000 or more for the Net Profits Tax are required to pay those taxes electronically.
File a return by mail
Mail your return to:
P.O. Box 1660
Philadelphia, PA 19105-1660
Pay by mail
Mail all payments with a payment coupon to:
P.O. Box 1393
Philadelphia, PA 19105-1393
Request a refund by email
Mail your return and refund request to:
P.O. Box 1137
Philadelphia, PA 19105-1137