Philadelphia’s Use and Occupancy Tax is a monthly city tax on real property used for business purposes, charged at 1.21% of the property’s assessed value for 2026.1City of Philadelphia. Use and Occupancy Tax It’s separate from the real estate tax, it’s due by the 25th of each month, and the property owner is the one who has to file and pay, even when a tenant is the business actually using the space.
Who Owes the Tax
You owe if your business operates out of a Philadelphia location, if you run a business from your Philadelphia home, or if you own property in the city that tenants or sub-tenants use for business.1City of Philadelphia. Use and Occupancy Tax Any commercial, industrial, or professional use of real property inside city limits is in scope.
Residential use is not. Philadelphia Code § 19-1806 excludes real estate used as a dwelling or principal residence.2American Legal Publishing. Philadelphia Code 19-1806 – Authorization of Realty Use and Occupancy Tax In a mixed-use building, only the business portion counts. A property that’s half retail and half apartments owes on the retail half only.
The same section exempts anyone already exempt from Philadelphia real estate tax.2American Legal Publishing. Philadelphia Code 19-1806 – Authorization of Realty Use and Occupancy Tax That typically covers nonprofits and religious institutions with a real estate tax exemption, but the exemption follows the real estate tax status of the property, not a separate U&O carve-out.
Landlord and Tenant Responsibility
The property owner files the return and pays the city, even if a tenant is the one operating the business. The city’s instructions require the owner to collect the tax from tenants and remit it along with anything the owner personally owes.1City of Philadelphia. Use and Occupancy Tax
If a tenant refuses to pay or disappears, the Department of Revenue still looks to the owner. Landlords typically address this by putting the tenant’s obligation into the lease so there’s a contractual right to recover the amount.
How the Tax Is Calculated
Take the assessed value from the Office of Property Assessment, apply the percentage of the property used for business, and multiply by 1.21%.1City of Philadelphia. Use and Occupancy Tax That’s the annual figure. Divide by twelve for the monthly payment.
A property assessed at $500,000 used entirely for business owes $6,050 a year, roughly $504 per month. If only 60% is commercial, the rate applies to $300,000, and the annual tax is $3,630.
Mixed-Use Properties
For a building with both residential and commercial areas, you need a defensible percentage. Square footage measurements and lease agreements that identify commercial areas are the usual bases. Keep the documentation, whether that’s a floor plan, a lease rider, or an architect’s breakdown, because the Department of Revenue can ask you to justify the split.
The $2,000 Exemption Has Expired
From 2013 through 2025, taxpayers could subtract the first $2,000 of assessed value before calculating the tax. That exemption expired on December 31, 2025, and does not apply for the 2026 tax year.1City of Philadelphia. Use and Occupancy Tax The dollar impact is small, about $24 a year, but if your software or preparer is still applying it, your returns will be wrong.
What You Need Before Filing
You need two identifiers. The first is your Philadelphia Tax Identification Number (PHTIN), issued when you register as a taxpayer with the city.3City of Philadelphia. Get a Tax Account The second is the property’s nine-digit OPA account number from the Office of Property Assessment.4City of Philadelphia. FAQ – Office of Property Assessment You can look up an OPA number by street address on the city’s property search site.5City of Philadelphia. Find Property Information
On the return itself, you’ll enter the assessed value, the percentage used for business, and the number of days the space was used commercially during the reporting period. If you lease part of a larger building, your lease should specify the square footage; keep that along with any floor plans showing where commercial space ends.
Filing and Paying
Returns and payments go through the Philadelphia Tax Center, the city’s online tax portal.6City of Philadelphia. Access the Philadelphia Tax Center After logging in, you select the Use and Occupancy Tax, enter your figures, and submit. The system issues a confirmation number when the return is accepted.
You pay in the same session by electronic check (with your bank routing and account numbers) or credit card. Paper filing is available for anyone who can’t use the online system.
Monthly Deadline
Returns are due by the 25th of each month. If the 25th falls on a weekend or holiday, the deadline moves to the next business day.1City of Philadelphia. Use and Occupancy Tax The city publishes a calendar with each month’s specific date.7City of Philadelphia. Use and Occupancy Tax Due Dates There is no annual reconciliation return; the tax is entirely month-to-month.
Penalties and Interest
Late payment carries a penalty of 1.25% of the unpaid tax for each month or partial month the balance remains outstanding.8American Legal Publishing. Philadelphia Code 19-509 – Interest, Penalties and Costs Interest accrues at 0.75% per month, or 9% per year, on unpaid balances for 2026.9City of Philadelphia. Interest, Penalties, and Fees
Together, that’s roughly 2% per month on the unpaid amount, and the charges compound because each new month’s penalty and interest apply to the growing total. The Department of Revenue can also pursue collection action on persistently delinquent accounts.
Challenging Your Assessment
The tax rides directly on the assessed value, so an inflated assessment means an inflated bill every month. If you believe the Office of Property Assessment overvalued the property, you can appeal to the Board of Revision of Taxes on one of three grounds:
- Overvaluation: the estimated market value is too high.
- Lack of uniformity: your assessment is out of line with comparable nearby properties.
- Incorrect characteristics: the property description used to set the value contains substantial errors.
The standard deadline is the first Monday of October in the year before the tax year you’re challenging. If a new assessment notice arrives after that date, you get 30 calendar days from the notice to file. The same 30-day window applies if you recently purchased the property or signed an agreement of sale after the October deadline.10City of Philadelphia. Property Assessment Appeals
Tenants who pay all or part of the U&O tax qualify as aggrieved parties and can file an appeal themselves. You don’t have to be the property owner.10City of Philadelphia. Property Assessment Appeals
Opening and Closing a Tax Account
Before your first return, you need a PHTIN. You can register through the Philadelphia Tax Center or by paper application.3City of Philadelphia. Get a Tax Account You’ll also need a Commercial Activity License to do business in the city; the same registration process can cover both.
When the business closes or leaves Philadelphia, close the tax account so the city stops expecting returns. This can be done through the Tax Center or by submitting a printable change form.11City of Philadelphia. Change Form – Update or Close a Tax Account File any outstanding returns and pay all balances first. An account with unpaid liabilities won’t close cleanly, and penalties and interest keep running until everything is settled.