Effective July, 1 2017 the tax rate will change from 3.9004% to 3.8907% for residents -- from 3.4741% to 3.4654% for non-residents.
The Wage Tax must be filed and paid on a schedule that corresponds with how much money is withheld from employees’ paychecks. See below to determine your filing frequency.
for residents of Philadelphia, or 3.4741% for non-residents
Who pays the tax
The City Wage Tax is a tax on salaries, wages, commissions, and other compensation. The tax applies to payments that a person receives from an employer in return for work or services. All Philadelphia residents owe the City Wage Tax, regardless of where they work. Non-residents who work in Philadelphia must also pay the Wage Tax.
All employers located in Pennsylvania are required to register with the City of Philadelphia within 30 days of becoming an employer of either:
- A resident of Philadelphia, or
- A non-resident of Philadelphia who performs services for an employer in Philadelphia.
Employers are required to withhold the Wage Tax from all employees who meet these criteria.
Employers and payroll service companies must also submit W-2s to the City of Philadelphia. Refer to our W-2 submission guidelines for details.
Payroll Service Companies
Payroll services that remit Philadelphia Wage Tax payments for their clients are required to make these payments electronically by either ACH Credit or Debit. You should obtain your client’s established City Wage account numbers and filing frequencies upon enrollment. A client who does not have a City Wage account number must register for one through the City’s eFile/ePay website.
Payroll service companies must follow Revenue file specifications when remitting returns. Download the payroll specification document for the requirements.
Those who don’t have tax withheld
You must register for an Earnings Tax Account if:
- You are a resident of Philadelphia or a non-resident who works in Philadelphia, and
- Your employer is not required to withhold the Wage Tax.
Filing Frequency Determination
If you are an employer, your filing frequency is determined by the amount of Wage Tax you withhold.
|Amount you withhold||How often you must file Wage Tax returns|
|Less than $350 per month||Quarterly|
|More than $350 but less than $16,000 per month||Monthly|
|$16,000 or more per month (bi-monthly payroll deductions)||Semi-monthly|
|$16,000 or more per month||Weekly|
Semi-monthly and weekly filers must send their wage tax payments electronically through Automated Clearing House (ACH) Debit or Credit. Learn more from the Pay Taxes page.
If you do not have payroll for a reporting period, you must submit a zero payment return or visit the E-File page to report your NTL (No Tax Liability) indicating no tax due to prevent a non-filer notice. Any period without a filed return will be classified as a non-filer. As a result, court filings and fines will be imposed upon the taxpayer. Employers with active wage accounts and no Philadelphia wage withholding should complete a change form to cancel the wage account.
Tax rates, penalties, & fees
How much is it?
Effective July 1, 2017:
3.8907% for Philadelphia residents
3.4654% for non-residents
July 1, 2016—June 30,2017:
3.9004% for Philadelphia residents
3.4741% for non-residents
July 1, 2015—June 30, 2016:
3.9102% for Philadelphia residents
3.4828% for non-residents
What happens if you don't pay on time?
Interest is due on any unpaid taxes at the rate specified by Philadelphia Code 19-509. In addition, penalty will be due at the rate of 1.25% for each month the tax remains unpaid.
For more information about interest and penalty rates, visit the interest, penalties, and fees page.
Discounts & exemptions
Are you eligible for a discount?
Income-based Wage Tax refund
If you’re approved for tax forgiveness under Pennsylvania 40 Schedule SP, you may be eligible for an income-based Wage Tax refund. People who meet the criteria can receive a refund of up to 0.5% on City Wage Taxes that their employer withheld from their paychecks.
How to apply the reduction
You must attach a completed Pennsylvania Schedule SP for tax year 2016 to your refund petition 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.
Refunds for time worked outside Philadelphia
If you pay more Wage Tax than is due, you can file a claim to have the excess amount refunded to you. This might happen if you’re a non-resident and your employer withholds Wage Tax for time you spent working outside Philadelphia. To receive that portion of Wage Tax back, you’ll need to request a refund.
Can you be excused from paying the tax?
Some forms of income are exempt from the Wage Tax. These include:
- A scholarship received as part of a degree program, for which you do not provide a service
- Pension payments
- Worker’s compensation
- Active military service pay and bonuses
- Death benefits
- Employer-paid health insurance premiums
- Witness and juror fees
How to pay
If you are an employee of a company located in Pennsylvania, Wage Tax will be automatically withheld from your paycheck and paid by your employer to the City of Philadelphia.
If you are an employer, you will need to file and pay Wage Tax according to a schedule that corresponds with the amounts you withhold. If you use an outside payroll service, you must file and pay the tax electronically.
Weekly & semi-monthly filers
Must remit payment electronically via ACH Debit or Credit.
Monthly & quarterly filers
Mail payments with coupons to:
P.O. Box 8040
Philadelphia, PA 19105-8040
P.O. Box 1670
Philadelphia, PA 19105-1670