Philadelphia BIRT Tax: Filing, Payment, and Exemptions

The Philadelphia Business Income and Receipts Tax, known as the BIRT, applies to every person and entity doing for-profit business inside city limits. For tax year 2025, returns due April 15, 2026, the tax has two parts: 1.140 mills on gross receipts (that is $1.14 per $1,000 of taxable receipts) and 5.71% on net income.¹² The single biggest change this year: the $100,000 small-business exemption is gone, so businesses that never had to file before now do.

Who Has to File

Every individual, partnership, LLC, and corporation engaged in any for-profit activity inside Philadelphia must file a BIRT return, whether or not the business keeps a physical office or storefront in the city. Estates and trusts fall under the same rule when they carry on business activity. Nonprofits, religious institutions, and similar organizations are generally not subject to the BIRT, but a nonprofit running a separate for-profit operation owes tax on that activity.²

Businesses based outside Philadelphia are pulled in through economic nexus. If a business has at least $100,000 in Philadelphia gross receipts during any twelve-month period ending in the current year, the city treats it as having nexus and subjects it to the BIRT. This standard has applied since tax year 2019, following the U.S. Supreme Court’s decision in South Dakota v. Wayfair, Inc.³ Remote sellers, digital service providers, and out-of-state contractors meeting that threshold have to register and file just like a business with a Center City address.

How the Tax Is Calculated

The BIRT has two separate components, and you owe on both. The first is a tax on gross receipts: every dollar your business takes in from sales or services performed in Philadelphia, before subtracting expenses. The second is a tax on net income: the profit left after allowable business deductions. A high-revenue, low-margin business still contributes on the gross receipts side, and a business with modest revenue but strong margins pays more on the net income side.

For tax year 2025 the rates are 1.140 mills on gross receipts and 5.71% on net income.¹² Both rates are scheduled to decline gradually each year, with the city planning to fully eliminate the gross receipts portion and drop the net income rate to 2.8% by 2038.

Businesses operating both inside and outside Philadelphia must apportion their receipts and income to determine the share taxable by the city. Only Philadelphia-sourced activity counts. If you earned the revenue from a customer or activity located in Philadelphia, it belongs on the Philadelphia return.

The End of the $100,000 Exemption

For years, the BIRT included a statutory deduction that let businesses exclude the first $100,000 of gross receipts, and a proportional share of net income, from their calculation. That exemption is gone. Beginning with tax year 2025, businesses no longer receive it, and returns for that year are due by April 15, 2026.¹

The city dropped the exemption in response to a legal challenge and announced a transition policy to ease the impact.⁴ For tax year 2025, all businesses operating in Philadelphia must file a BIRT return, including those with less than $100,000 in Philadelphia gross receipts.⁵ If your business used to fall under the threshold and never filed, you have a filing obligation now.

Filing Deadline, Extensions, and Estimated Payments

The BIRT return and payment for tax year 2025 are due by April 15, 2026.⁵ If you need more time to file, the Department of Revenue automatically grants a 60-day extension from the April due date. You do not submit a separate extension form; filing an extension payment voucher, online or on paper, serves as both the extension request and the payment. If the IRS grants you a federal filing extension, the city may extend your BIRT deadline to match, up to six months from the original IRS due date.²

An extension of time to file is not an extension of time to pay. If you owe and pay after April 15, interest and penalties start accruing immediately.

Philadelphia also requires businesses to prepay estimated BIRT liability for the coming year, and the rule catches many owners off guard because the prepayment is due with the prior year’s return. The schedule phases in:

First-year return: no estimated payment is required for the following year.
Second-year return: pay estimated tax equal to 100% of your prior year’s actual tax. For this filing only, you may split that amount into quarterly installments due April 15, June 15, September 15, and January 15.
Third year onward: the full 100% estimated payment is due by April 15 with your return, no quarterly option.

This phased schedule also applies to existing businesses filing the BIRT for the first time in 2026 because of the exemption change.² If you overpay, you can request a refund or apply the credit to a future period through the Philadelphia Tax Center or by calling taxpayer services at (215) 686-6600.

How to File and Pay

Before filing, every business needs a Philadelphia Tax Identification Number (PHTIN). You use it for all local tax interactions and to obtain a Commercial Activity License (CAL), which is required to do any business in Philadelphia.⁶ The CAL itself is free.⁷ Register for both through the Philadelphia Tax Center.

To prepare the return, use your internal financial records to determine Philadelphia-sourced gross receipts and net income. Your federal return (Schedule C for sole proprietors, Form 1120 for corporations) is a useful reference for overall income figures, but do not submit copies of your federal returns with the BIRT filing.⁵

File electronically at tax-services.phila.gov. Log in, enter your gross receipts and net income figures, and submit. Payment options include e-check and major credit cards. The system generates a digital confirmation; keep it in case of a future audit.²

What Happens If You Don’t File or Pay

Late BIRT returns and payments trigger a penalty of 1.25% of the unpaid balance per month. Interest accrues on top of that at 9% per year (0.75% per month) for calendar year 2026.⁸ Charges compound quickly. A business that owes $5,000 and misses the deadline by six months would face roughly $600 in combined penalties and interest before any additional enforcement costs.

Enforcement escalates beyond fees. The city can revoke your Commercial Activity License through a three-step process:

A mailed Notice of Intent to Revoke License listing your unfiled and unpaid taxes, giving you 10 days to pay or enter a payment agreement.
A hand-delivered second notice if you miss the 10-day window, stating the date your license will be revoked.
After revocation, a Cease Operations Order posted at the business location. Operating without a license after revocation carries a $300-per-day fine, and the Philadelphia Police Department may enforce the closure.

A revoked license also limits your access to certain payment agreement options.⁹ If you can’t pay in full, contacting the Department of Revenue before you miss the deadline is the better move. The city is generally willing to arrange payment plans with businesses that come forward before enforcement begins.

Jump Start Philly: A Two-Year Exemption for New Businesses

The Jump Start Philly program provides a two-year BIRT exemption for qualifying new businesses. You must meet all of the following:

You did not file a BIRT return in the prior five years.
At least three employees by the end of your first year, and six employees by the end of your second year.
The business is not in real estate.

Claiming Jump Start requires a paper filing. Submit a New Business Waiver Application as part of the paper Commercial Activity License application, then file a paper BIRT return with Worksheet N attached.¹⁰ With the $100,000 exemption gone, this is one of the few remaining routes to zero BIRT liability for a new business, and the extra paperwork is worth it if you qualify.

1
City of Philadelphia. Philadelphia Business Taxes Are Changing
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City of Philadelphia. Business Income and Receipts Tax (BIRT)
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City of Philadelphia. City of Philadelphia Policy Regarding Economic Nexus for Business Income and Receipts Tax
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City of Philadelphia. City of Philadelphia Clarifies Business Income and Receipts Tax (BIRT) Policy to Ease Transition for Businesses Impacted by the Exemption Change
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City of Philadelphia. 2025 BIRT NPT Filing Instructions – General Information
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City of Philadelphia. Get a Tax Account
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City of Philadelphia. Get a Commercial Activity License
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City of Philadelphia. Interest, Penalties, and Fees
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City of Philadelphia. Owing Taxes Can Affect Your Ability to Do Business in Philly
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City of Philadelphia. Jump Start Philly