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Philadelphia Individual Taxes
The City Wage Tax, also called the Earnings Tax, is a tax on salaries, wages, commissions and other compensation paid to an employee who is employed by or renders services to an employer. Generally, individuals who work for a company in Pennsylvania will find that the company deducts the Wage Tax from their pay since this is required by law.
All Philadelphia residents owe the City Wage Tax regardless of where they perform services. Non-residents who perform services in Philadelphia must also pay the Wage Tax.
If you are a resident of Philadelphia or a non-resident who works in Philadelphia, and your employer is not required to withhold the tax, you must register for an Earnings Tax Account.
The City and the School District of Philadelphia impose a tax on all real estate in the City. The Board of Revision of Taxes determines the value of the property on which the taxes must be paid.
If you have a mortgage, your tax bill may be sent directly to your mortgage company for payment from your escrow fund.
The School District of Philadelphia imposes a tax on various classes of unearned income, which are not subject to Philadelphia Business Privilege Tax, or Wage Tax. Some examples of unearned taxable income include dividends and certain rents and royalties.
The Realty Transfer Tax is levied on the sale or transfer of Real Estate located in Philadelphia. The tax also applies to the sale or transfer of an interest in a corporation or partnership that owns real estate. Certain long term leases are also subject to this tax.
The City tax rate is three percent (3%) of the sale price or the fair market value, if no sales price exists. However, in addition to the City tax, the Commonwealth of Pennsylvania charges 1%, making a combined rate of 4%.
Generally the transfer of real estate between family members is exempt. Examples are a transfer between husband and wife, children of the same parent, and lineal ascendants / descendants. Property that is received under a will is also exempt.