Philadelphia Local Tax Guide (2026)

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.

Residency follows domicile or statutory residence: if Philadelphia is your domicile, or you maintain a permanent place of abode in the city and spend more than 183 days there, you are generally treated as a resident and taxed at the resident rate regardless of where you work.

The Earnings Tax is the self-filed twin of the Wage Tax. It applies when no employer withholds \u2014 for example, a city resident whose out-of-state employer does not withhold Philadelphia tax. The rate is identical to the Wage Tax rate.

Pennsylvania adds its flat state income tax on top, so a Philadelphia resident\u2019s combined state-plus-city wage-tax burden is among the highest of any U.S. city. Because the city rate applies to gross compensation, it is not reduced by deductions.

Philadelphia is its own local tax collection district under Pennsylvania\u2019s Act 32, so employers withhold city tax for city residents separately from the state income tax.

This guide summarizes structural facts for planning. It is not a substitute for the official Pennsylvania tax code or a licensed preparer.