What Is the Philadelphia Resident Wage Tax Rate?

The Philadelphia resident Wage Tax rate is 3.74% on earned income, effective July 1, 2025.¹ It applies to salaries, wages, commissions, and other compensation, whether you work inside the city or elsewhere. The city adjusts the rate each July 1, so the figure can change again on July 1, 2026.

Recent Rate History

The resident rate has edged down over the past several years:

July 1, 2025: 3.74% (current)
July 1, 2024: 3.75%
July 1, 2023: 3.75%
July 1, 2022: 3.79%
July 1, 2021: 3.84%

Non-residents who work in Philadelphia pay a lower rate, currently 3.43%.¹ If you live in the city, you owe the resident rate on every dollar of earned income, even if your office is in the suburbs or in another state.

What the Rate Applies To

The Wage Tax covers salaries, wages, commissions, and other compensation you receive from an employer for work or services.² Bonuses and tips count. These amounts normally appear on your W-2.

It does not reach unearned income such as dividends, interest, or capital gains. Residents owe Philadelphia’s separate School Income Tax on much of that unearned income, which is a different filing with its own rules.

Self-employed residents don’t pay the Wage Tax on their business income, but they do owe the Net Profits Tax at the same 3.74% resident rate.³

Who Counts as a Resident

You owe the resident rate if Philadelphia is your domicile, meaning your permanent home. The city looks at where you vote, where your driver’s license is registered, where you receive mail, and similar markers. Maintaining a home in Philadelphia makes you a resident for Wage Tax purposes even if you spend significant time elsewhere for work.

How You Pay

If your employer has a physical location in Pennsylvania, the Wage Tax is withheld from your paycheck automatically.¹ You don’t need to do anything on your end. The employer handles the quarterly filings and remits what it withholds.

If your employer is based outside Pennsylvania and isn’t required to withhold, you file and pay the same tax yourself through the Philadelphia Tax Center. In that posture the city calls it the Earnings Tax, but the rate is identical.² Paper returns are no longer accepted.¹

Self-filers owe quarterly estimated payments through the year, with an annual reconciliation due April 15.² Missing a quarterly deadline triggers interest. Remote workers whose companies are headquartered out of state are the group most likely to land in this situation without realizing it.

Income-Based Refund for Lower Earners

Lower-income residents can recover a large share of the Wage Tax. If you qualify, the city treats you as subject to a 1.5% rate instead of the full 3.74%, and refunds the difference.⁴

Eligibility rides on Pennsylvania’s Tax Forgiveness program and depends on your filing status and dependents. A single person with no dependents qualifies for full forgiveness if income does not exceed $6,500. A married couple with no children qualifies at $13,000. Thresholds rise with each dependent; a single parent with two children qualifies up to $25,500.⁵ Partial forgiveness is available at higher income levels on a sliding scale.

Because employers withhold the full 3.74% from every paycheck, eligible residents have to apply for the refund after the tax year ends. You file a refund petition and include a copy of your Pennsylvania Schedule SP.⁶ If you don’t apply, you don’t get the money back.

Credit for Local Taxes Paid Outside Pennsylvania

Residents who pay local income taxes to a jurisdiction outside Pennsylvania can request a refund so the same income isn’t taxed twice at the local level.⁷ This covers city or county income taxes only. State income taxes don’t qualify, so Delaware state income tax, for example, is not refundable through this credit.

The refund is the lesser of what you paid the other local jurisdiction or what you paid Philadelphia on that same income.⁷ Keep records of the other jurisdiction’s withholding. A refund claim has to be filed within three years from the date the tax was paid or due, whichever is later.⁸

What Happens If You Pay Late

Interest and penalties run at the same time on unpaid Wage Tax. For 2026, unpaid tax accrues interest at 9% per year, or 0.75% of the balance each month.⁹ A separate 1.25% monthly penalty applies on top of that.¹⁰ Combined, that’s 2% per month on any balance owed.

Failing to file a return at all carries a fine of up to $300 per offense, counted anew on the first of each month the return remains unfiled.¹⁰ A $5,000 balance left unpaid for six months would collect $600 in penalties and interest, plus up to $1,800 in failure-to-file fines if no return was submitted.

1
City of Philadelphia. Wage Tax (employers)
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City of Philadelphia. Earnings Tax (employees)
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City of Philadelphia. Philly extends deadline for relief program, announces tax cuts
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City of Philadelphia. Do you qualify for Philly’s income-based Wage Tax refund?
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Pennsylvania Department of Revenue. Tax Forgiveness
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City of Philadelphia. Paper income-based Wage Tax refund petition
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City of Philadelphia. Request a refund for taxes paid to local jurisdictions
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City of Philadelphia. Request a Wage Tax refund
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City of Philadelphia. Interest, penalties, and fees
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American Legal Publishing. Philadelphia Code Title 19 – Finance, Taxes and Collections – Section 19-509