Philadelphia Taxes

Philadelphia taxes are the City's main source of revenue and a frequent subject of political debate. The City levies taxes under the Home Rule Charter and state enabling laws, but its power is limited by Pennsylvania law (see Home Rule Limits and State Preemption). The Revenue Department administers and collects most of them. About three-fourths of General Fund revenue comes from taxes, so changes to tax structure, such as the multi-year wage and business tax cuts adopted in 2025, shape the entire budget.

1 The main taxes and what they raise

The FY2027 adopted budget estimates the following General Fund tax receipts:^[1]

• Wage, earnings and net profits tax (City share): $2,179 million; the separate PICA share of the resident wage tax, remitted to the City after the authority's expenses, adds about $797 million (see PICA).
• Real estate tax (City share): $1,012 million, up 9.74 percent from the FY26 estimate.
• Business Income and Receipts Tax (BIRT): $806 million.
• Real estate transfer tax: $377 million.
• Sales tax (City share): $342 million. The sales tax is 8 percent in Philadelphia, 6 percent state and 2 percent local, as of 2026.
• Philadelphia Beverage Tax: $72.5 million.
• Other taxes (parking, amusement, tobacco and others): $55 million.

The City's budget analysis notes that education, medical institutions and government employment accounted for more than $1 billion in wage tax collections in FY25, about 45 percent, which makes the City's revenue sensitive to federal cuts to research and employment.^[2]

2 Wage and business tax cuts

In June 2025 City Council approved, and the Parker administration continued in its FY27-31 Five Year Plan, a gradual reduction of the wage tax and BIRT.^[3] The resident wage tax rate fell from 3.79 percent in July 2022 to 3.75 percent in 2023 and 2024, 3.74 percent from July 1, 2025 and 3.735 percent from July 1, 2026; the nonresident rate went from 3.44 percent to 3.43 percent in July 2025 and 3.425 percent in July 2026.^[4] The City has said the rates will drop over time to 3.70 percent for residents and 3.39 percent for nonresidents. For BIRT, the net income rate fell from 5.81 to 5.71 percent for tax year 2025, while the gross receipts rate fell from 1.415 to 1.410 mills; the City said the gross receipts rate will decrease each year until it is eliminated in 2038.^[3][5] Supporters argue the cuts help attract residents and employers; critics, including some Council members, worry about the loss of revenue at a time of federal uncertainty.

3 Property taxes and relief

The real estate tax rate is applied to the market value set by the Office of Property Assessment; appeals go to the Board of Revision of Taxes. The combined rate is 1.3998 percent, split between the City and the School District, with the split shifting by year (0.6159 percent City and 0.7839 percent School District for tax year 2025).^[6] The Tax Year 2027 reassessment, effective January 1, 2027, raised the citywide median value about 3 percent and the estimated bill for the median-valued home by about $97.^[7] Relief includes the Homestead Exemption (a $100,000 reduction in taxable value, saving most homeowners about $1,399; enrollment deadline December 1, 2026), an eleven-month installment plan, a senior and low-income tax freeze, the Longtime Owner Occupants Program and payment agreements.^[7] Pennsylvania's constitutional uniformity requirement means the City cannot charge different rates to commercial and residential property, a point the Mayor cited when ruling out a property tax increase in 2026.^[8] Tax abatements for new construction are covered in Tax Abatement and Development Incentives.

4 Other taxes and the 2026 Council action

The use and occupancy (U&O) tax applies to commercial uses of property at 1.21 percent of assessed value. Effective January 1, 2027 the tax on cell towers will be calculated on the tower's assessed value only, expected to generate about $2.4 million a year for public schools.^[9] The realty transfer tax rose to 4.578 percent (3.578 percent City and 1 percent Commonwealth) on July 1, 2025.^[3] The Parker administration proposed a $1-per-trip ride-share tax, a hotel and short-term-rental tax and a retail delivery tax for FY27, but all three failed to get the nine votes needed in Council and were dropped in June 2026.^[8] A proposed change to require remote sellers to remit the local sales tax, worth about $1.5 million a year, would require action by the state legislature.^[10] See Pennsylvania State Government and Philadelphia.

5 Appeals and where the money goes

Disputes about tax interest, penalties and non-property assessments go to the Tax Review Board; disputes about property value go to the BRT. Revenue also runs assistance programs for water and property tax. Revenue from taxes pays for services in the City budget and helps fund schools, SEPTA and the pension fund. For help understanding a bill see How to Get Help From the City.

See also: Revenue Department, Finance Department, Philadelphia City Budget Process, How to Read the City Budget.

References

1. City of Philadelphia, The Mayor's Operating Budget in Brief for Fiscal Year 2027, as adopted by the Council, June 2026, General Fund Revenue Comparison (phila.gov).
2. Office of the Director of Finance, "Fiscal Year 2027 Budget Testimony," March 25, 2026 (phlcouncil.com).
3. City of Philadelphia, "Philly extends deadline for relief program, announces tax cuts," June 18, 2025 (phila.gov).
4. City of Philadelphia, "Wage tax: employers" rate schedule (phila.gov).
5. City of Philadelphia, Department of Revenue, Business Income & Receipts Tax (BIRT) rates by tax year (phila.gov).
6. City of Philadelphia, Real Estate Tax regulations and historic tax rates (phila.gov).
7. City of Philadelphia, "City of Philadelphia to mail 2027 property assessments and launch expanded outreach to connect homeowners to tax relief," June 30, 2026 (phila.gov).
8. WHYY, "Philadelphia Mayor Cherelle Parker signs $7.1B budget into law following City Council approval," June 2026 (whyy.org).
9. City of Philadelphia, "What you need to know about changes to Philly's use and occupancy tax," June 11, 2026 (phila.gov).
10. City of Philadelphia, Operating Budget in Brief for Fiscal Year 2027, Introduction (phila.gov).