As part of a planned schedule to lower the City Wage Tax, reduced Wage Tax rates start July 1, 2017. Any paycheck that businesses issue with a pay date after June 30, 2017 must have Philadelphia City Wage Tax withheld at the new rate.
- The new Wage Tax rate for residents of Philadelphia is 3.8907% (.038907).
- The new Wage Tax rate for non-residents of Philadelphia who are subject to the Philadelphia City Wage Tax is 3.4654% (.034654).
At its height, the Philadelphia Wage Tax reached 4.96% in 1985. Since the mid-1990s, Philadelphia Mayors have steadily whittled the number down. Like his predecessors, Mayor Kenney, along with City Council, is continuing gradual reductions to the City’s wage tax rates to make Philadelphia more competitive. This reduction is part of a long-term initiative to reduce the Wage Tax for residents and nonresidents to their lowest rates in 40 years by 2022. By FY22, Philadelphians can expect the Wage Tax rate to decline to 3.6997% for residents and 3.2953% for nonresidents.
Starting in tax year 2017, this rate change also applies to:
- Earnings Tax (for Philadelphia residents who work outside of Pennsylvania and don’t have the Wage Tax withheld from their paycheck)
- Net Profits Tax (on the net profits from the operation of a trade, business, profession, or enterprise)
- School Income Tax (for Philadelphia residents who have unearned income like annuities, short-term rental income, and cash lottery winnings)
If you have questions about this rate change, email email@example.com or call 215.686.6600.
If you have any questions or if you would like more information, contact Fred Schutz at (856) 722-5300 ext. 201 or Dave Gill at ext. 210.