What Is the Philadelphia City Wage Tax for Non-Residents?

If you live outside Philadelphia but work inside the city, you owe the Philadelphia City Wage Tax for non-residents at 3.43% on your gross earnings for that work, effective July 1, 2025.¹ The rate applies to salary, hourly wages, commissions, bonuses, and vacation pay earned for time spent working within city limits, regardless of where your employer is headquartered.

Who Owes the Tax

The trigger is physical presence. If you show up to a job site, office, or client location inside Philadelphia and earn compensation for that time, the tax applies to those earnings.² A commute from the suburbs, from New Jersey, or from Delaware does not change that.

You may see the city use two names for the same tax at the same rate. It is called the Wage Tax when your employer withholds it from your paycheck and the Earnings Tax when you have to pay it yourself. If your employer does not withhold, you are on the hook to file and pay directly.³

For comparison, Philadelphia residents pay 3.74% on the same types of income. The non-resident rate is lower because people who live outside the city use fewer municipal services. The city sets rates under Philadelphia Code § 19-1502 and adjusts them annually effective July 1, so a single calendar year can straddle two rates.¹

What’s Taxed and What Isn’t

The tax is calculated on gross compensation, not take-home pay. Deductions for health insurance premiums, retirement plan contributions, and other pre-tax benefits do not reduce the amount subject to the Wage Tax. Paid vacation counts too: the value of a vacation your employer provides is taxable compensation.³

The following types of income are exempt:¹

Pension payments
Workers’ compensation benefits
Active military pay and bonuses
Sick or disability benefits
Employer-paid health insurance premiums, when provided uniformly to all employees
Scholarships received as part of a degree program where no service is given in return
Witness and juror fees, death benefits, and life insurance proceeds

Interest, dividends, and other investment income are also outside the scope of this tax, which targets earned compensation.

Military Spouses

Under the federal Military Spouses Residency Relief Act, a service member’s non-military spouse can keep out-of-state resident status and avoid the Philadelphia Wage Tax on non-military earnings. Three conditions must be met: the service member is stationed in Pennsylvania under military orders, the spouse is in the state solely to be with the service member, and both share the same legal domicile outside Pennsylvania.⁴

How the Tax Gets Paid

In most cases, your employer withholds the Wage Tax from each paycheck and remits it to the Philadelphia Department of Revenue. You should see it as a line on your pay stub, and the city expects withholding to adjust automatically when the rate changes each July 1.¹

If your employer is located outside Pennsylvania or otherwise does not withhold the tax, the obligation shifts to you. You file an Earnings Tax return and pay the city directly. The rate and taxable base are identical either way.³ The annual Earnings Tax return is due April 15 for the prior year, so the return covering tax year 2025 is due April 15, 2026.

Unpaid balances accrue interest at 9% per year for calendar year 2026, which works out to 0.75% per month, and separate late-filing penalties apply on top of that.⁵ The city does not have to send a reminder before interest starts running. If you realize after the deadline that your employer never withheld, file and pay as soon as you can.

Getting a Refund for Days Worked Outside the City

This is where many non-residents leave money with the city. If your employer withheld the Wage Tax on 100% of your compensation but you spent part of the year working somewhere other than Philadelphia, you can request a refund for those days. The situation is common for remote workers and for employees who travel to client sites outside the city.²

The refund is calculated as a proportion: days worked outside Philadelphia divided by total days worked everywhere during the year. To file, you need:

A count of total days worked inside and outside Philadelphia
Your W-2
A signed letter on company letterhead from your employer certifying the dates you were required to work at a location outside the city²

The employer letter is where most petitions trip up. The city requires certification that you were required to work outside Philadelphia, not that you chose to. Days you worked from home voluntarily, when your employer expected you in a Philadelphia office, generally will not count.

How to Submit the Petition

The fastest route is the Philadelphia Tax Center online portal. You do not need an account. Scroll to the “Refunds” panel, select “Request Employee Wage Tax Refund,” and upload your W-2 and employer letter.⁶ Paper petitions are accepted but take significantly longer; the city asks that you allow an extra 30 days before checking status on a paper filing.

Online petitions normally process in six to eight weeks, stretching to ten or twelve weeks during peak filing season.⁷ Approved refunds come by paper check or by direct deposit if you selected it during filing, and you can track status through the same portal you used to submit.⁸

You have three years from the date the tax was paid or due, whichever is later, to file a refund claim.⁸ That window is generous, but filing promptly gets your money back sooner and avoids the risk of lost documentation.

If You’re Self-Employed

Self-employed non-residents who earn income from business conducted in Philadelphia owe the Net Profits Tax, not the Wage Tax. The non-resident Net Profits Tax rate for tax year 2025 is 3.43%, the same percentage, but it applies to net profits rather than gross compensation, so ordinary business expenses can be subtracted before calculating what you owe.⁹

Credit on Your Home-State Return

New Jersey residents who pay the Philadelphia Wage Tax can claim a credit on their New Jersey state income tax return for the amount paid. The New Jersey-Pennsylvania reciprocal tax agreement does not cover local wage taxes imposed by Pennsylvania municipalities, so the credit is how you avoid being taxed twice on the same wages. You claim it by filing Schedule NJ-COJ with your New Jersey return.¹⁰

Pennsylvania residents who live outside Philadelphia and commute into the city generally receive a credit against their local earned income tax for the Wage Tax paid to Philadelphia. The specifics depend on your home municipality’s own rate and credit policies, so confirm with your local tax collector before you file.

1
City of Philadelphia. Wage Tax (employers)
2
City of Philadelphia. UPDATED Wage Tax Policy Guidance for Non-Resident Employees
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City of Philadelphia. Earnings Tax (employees)
4
Commonwealth of Pennsylvania. Military Pay for PA Personal Income Tax Purposes
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City of Philadelphia. Interest, Penalties, and Fees
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City of Philadelphia. Request Philadelphia Wage Tax Refunds Online
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City of Philadelphia. How to Track Your Philly Refund Online
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City of Philadelphia. Request a Wage Tax Refund
9
City of Philadelphia. Net Profits Tax
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NJ Division of Taxation. Credit for Taxes Paid to Other Jurisdictions