Philadelphia’s sales tax is changing soon. Here are a few things to keep in mind if you sell taxable goods or services to Philadelphia customers:

What’s changing

The biggest change is not an increase in the tax rate. Instead, the Commonwealth of Pennsylvania recently changed where Philadelphia’s 2% local sales tax applies.

Starting October 1, 2026, businesses must collect Philadelphia’s local sales tax based on where a taxable purchase is delivered. Previously, the tax was collected at the point of sale; it was based on the seller’s location. Under the new rule, it’s based on where the customer lives or where the product is delivered.

For example, if a business outside Philadelphia sells a taxable product and delivers it to a customer in Philadelphia, the business must collect the 2% local tax.

What’s NOT changing

The new sales tax law, Act 21 of 2026, does not change which products and services are taxable.

Philadelphia’s combined sales tax rate is 8%:

  • 6% Pennsylvania sales tax, plus
  • 2% Philadelphia sales tax

This rate won’t change. Instead, the new State law requires businesses outside Philadelphia that already collect Pennsylvania’s 6% sales tax to also collect and remit Philadelphia’s 2% tax when they make taxable sales to Philadelphians.

When does the change take effect?

The new State law took effect on July 12, 2026. The law applies retroactively to tax years after December 31, 2025. Businesses should start collecting and remitting local sales taxes right away.

However, Pennsylvania’s Department of Revenue is giving businesses time to update their systems. Enforcement won’t start until October 1, 2026.

What does this mean for shoppers?

You’re not paying a new tax. Philadelphia already has a 2% sales tax on taxable purchases. You may only notice the City’s 2% tax added to some online purchases that are delivered to your Philadelphia address.

For example, if you order a taxable item online from a business located outside Philadelphia. If that business already collects Pennsylvania sales tax, it must now also collect Philadelphia’s 2% tax when it ships the item to you in Philadelphia.

What should businesses do?

Make sure you’re ready for the October 1, 2026, enforcement date. Get started by:

  • Reviewing your sales and delivery information now.
  • Making sure your point-of-sale and online checkout systems are up to date.
  • Checking your tax collection and filing processes.
  • Working with a local tax professional.

If you’re a business that sells to Philadelphia customers, now is a good time to check your tax processes and make sure you are ready for October 1.

Have questions?

Vendors must collect this tax at the time of purchase and then pay it to the Commonwealth of Pennsylvania. Use the Pennsylvania Department of Revenue’s Online Customer Service Center to securely submit a question. You can also call the Department at 717-787-1064.

Find out more about the new State law, Act 21 of 2026.