Philadelphia local tax guide
Who pays Philadelphia's local tax
Residents owe the Wage Tax on all their compensation, wherever the employer is located. Nonresidents owe the lower rate on pay for work performed in Philadelphia, which covers suburban commuters and people who cross the river from New Jersey or come up from Delaware. Remote work helps only nonresidents, and only for days the employer required them to work outside the city; days at home by choice are still taxable. Pennsylvania suburbanites can credit the Philadelphia tax against the earned income tax where they live, so most do not pay both.
How the Philadelphia Wage Tax works
Philadelphia's tax comes from the Sterling Act, a 1932 state law, rather than the Act 32 earned income tax that every other Pennsylvania municipality uses. The city sets its own rates, its Department of Revenue collects the tax directly, and there is no separate school district share.
The rates changed partway through 2026. From January through June the city charged 3.74% to residents and 3.43% to nonresidents, and on July 1 those fell to 3.735% and 3.425%. Our calculator applies the July rates to the full year, so actual 2026 withholding runs a few dollars higher than our figures. The city has scheduled further small cuts for later years.
Worked example: $75,000 in Philadelphia
A single filer earning $75,000 pays $7,670 in federal income tax, $2,303 in Pennsylvania income tax at 3.07%, $4,650 in Social Security, and $1,088 in Medicare. A city resident adds $2,801 of Wage Tax, for take-home pay of $56,489, or about $4,707 a month.
A commuter at the same salary pays $2,569 and keeps $56,721, only $232 more than a resident. Against a no-local-tax baseline of $59,290, living and working in Philadelphia costs $2,801 a year, about $108 per biweekly paycheck. At $100,000 the resident bill is $3,735, and at $150,000 it is $5,603.
Withholding, refunds, and filing
Employers in Philadelphia withhold the Wage Tax automatically, and Philadelphia's rates override the Act 32 rates for any employee who lives or works in the city. If you live in Philadelphia but work for a suburban or out-of-state employer that does not withhold, you pay the same tax yourself through the city's Earnings Tax returns.
Nonresidents who were required to work outside the city on some days can file a Wage Tax refund petition with the Department of Revenue, using the city's employer certification template and a log of dates and locations. Lower-income workers may also qualify for the city's income-based Wage Tax refund. Philadelphia does not levy the Local Services Tax that other Pennsylvania municipalities charge.
How Philadelphia compares
Philadelphia's resident bill of $2,801 at $75,000 is among the highest in the state; only Chester's 3.75% resident rate edges past it, at $2,813. Reading costs a resident $2,700 and Pittsburgh $2,250.
Where Philadelphia really stands apart is its tax on commuters. Most Pennsylvania cities charge nonresidents 1%, and even Chester's commuter rate is 2%, while Philadelphia's 3.425% applies to every suburban and out-of-state worker. A Bethlehem resident pays $2,051 less local tax at this salary than a Philadelphia resident.
Tips for Philadelphia paychecks
New Jersey commuters still pay the Wage Tax
The Pennsylvania-New Jersey reciprocity agreement covers state income tax only. Your Philadelphia employer will still withhold the 3.425% nonresident Wage Tax.
Get remote days in writing
A refund for days outside the city requires that your employer required the remote work. Ask for the certification on the city's template, since the Department of Revenue rejects other formats.
Suburban residents: claim your credit
If you live in a Pennsylvania suburb, your home tax collector credits the Philadelphia Wage Tax shown on your W-2. Make sure payroll is not also withholding your home EIT.
Check the income-based refund
Philadelphia offers a partial Wage Tax refund to workers below an income limit that depends on household size. Apply through the Department of Revenue after the year ends.