Philadelphia Local Tax Guide (2026)
Philadelphia Wage Tax (withheld by employers) and Earnings Tax (filed by the worker) are the same tax at the same rates. Residents pay regardless of where they work; nonresidents pay on Philadelphia-source compensation. Rates step down under a five-year plan approved in 2025.
Verified 2026-08-21 against official city / state sources. Where a 2026 rate could not be individually re-verified, the verified year and source are stated instead of a guess.
Quick answer (Philadelphia, 2026)
Yes — Philadelphia levies the largest municipal wage tax in the U.S. In 2026 the resident rate is 3.735%–3.74% and the nonresident rate is 3.425%–3.43%. It is a flat tax on wages, salaries, commissions and other compensation. Source: City of Philadelphia Dept. of Revenue — Wage Tax (employers), rate history & current rates (retrieved 2026-08-21).
What you actually pay
The Wage Tax is withheld by employers; the Earnings Tax is the self-paid version when no employer withholds (e.g., working for an out-of-state employer). Both use identical rates.
Effective July 1, 2026 the resident rate is 3.735% (down from 3.74%) and the nonresident rate 3.425% (down from 3.43%). For calendar 2026 the first half runs at 3.74%/3.43% and the second half at 3.735%/3.425%.
Philadelphia has no reciprocal tax agreements with any other municipality. Residents working out-of-state may still owe Philadelphia tax plus the other jurisdiction’s local tax.
This is the largest municipal wage tax in the U.S. It funds general city operations.
This guide summarizes structural facts for planning. It is not a substitute for the official Pennsylvania tax code or a licensed preparer.
Frequently asked questions
Related state guide
Not tax, legal, or financial advice
FiscTalk provides general educational information from public sources. Tax outcomes depend on your full facts, filing history, and jurisdiction-specific rules that change yearly. Before filing or making decisions, consult a licensed CPA, EA, or attorney. FiscTalk is not a fiduciary and is not affiliated with the IRS or any state agency.
Sources & methodology
- City of Philadelphia Dept. of Revenue — Wage Tax (employers), rate history & current rates — Philadelphia Department of Revenue