UPDATE (November 2, 2021): The City’s new tax filing and payment website, the Philadelphia Tax Center, is now live. From now on, please complete online returns and payments for most City business taxes on the new website. Check out our online tax center guide for help getting started and answers to common questions.

Did you take a distribution from stocks, bonds or other investments in 2019? If you did, and you’re a resident of Philadelphia, you owe School Income Tax, or SIT. SIT applies to unearned income residents get from investments, rather than from wages.

Some people confuse property taxes and the School Income Tax. It’s true that 55% of your Real Estate Tax goes to the School District of Philadelphia. However, SIT is a completely separate tax. Every dollar collected through the SIT, goes directly to Philly’s public schools.

The tax has been on the books since 1967. Yet, after half a century, some people remain unfamiliar and perplexed by SIT.  For example, Lottery cash winnings are also subject to the tax. If you just realized you owe, don’t panic. You have until April 15 to pay SIT.

What you should not do is “SIT” this one out. Through better data sharing with the IRS, the City can now easily identify residents with unearned income who don’t pay the tax. Below we cover what unearned income is subject to SIT, and how to pay.

What is subject to SIT?

If you’ve received income from any of the categories listed below, you must file and pay SIT. The list below does not include all income types subject to SIT. You can read the official School Income Tax regulations to view the full list.

  • Dividends from stocks
  • Interest (excluding interest from savings and checking accounts, money market or certificate of deposit accounts)
  • Royalties
  • S-Corp distributions
  • Limited partner distributions (excluding those reported by a partnership on the Net Profit Tax return)
  • Rental income where the owner also resides in the property (i.e., duplex/triplex)
  • Gambling winnings, including Pennsylvania Lottery cash winnings
  • Capital Gains from the sale of property (including stocks and bonds held for 6 or less months)
  • Annuity distributions (refer to official regulations for more information)

How to pay

If you have unearned income subject to SIT and haven’t received an SIT form, you are still responsible for filing and paying the tax due on time. If you don’t pay on time, interest and penalties will be added to the amount you owe.

Photo: City of Philadelphia

File and pay SIT today!