Businesses that are in credit programs must file a return with the City, even if the credits reduce the tax liability to zero. The following credit programs are administered by the Department of Revenue and have specific City tax filing requirements. Follow the links below for details on each of the credit types.
Business tax credits
Credits for job growth
New businesses can use a 0% rate for Business Income and Receipts Tax (BIRT) and Net Profits Tax (NPT) for their first two years. They can also enjoy exempt license fees. To qualify, they must hire at least three full-time, non-family employees, who work in Philadelphia.
Businesses that have not filed their first Business Income and Receipts Tax (BIRT) return, can use a 0% rate for BIRT for their first three years. To qualify, a business must get certified as sustainable and commit to hiring at least two full-time, non-family employees, who work in Philadelphia.
Businesses that create jobs in Philadelphia may be eligible for a credit of $5,000 per job created, or 2% of the annual wages paid. Additional guidelines apply.
All other Business Tax credits
Businesses contributing to Community Development Corporations may be eligible for a tax credit against the City’s Business Income and Receipts Tax (BIRT).
Businesses that have suffered a loss of net income and receipts/sales of 10% or more at a location where a public works projects substantially obstructed access to the business for 30 days or more may apply for the Distressed Business Tax Credit.
If you construct a green roof on your business building, you can claim a credit for 50% of the money you spend constructing the green roof. The maximum amount of this credit is $100,000.
Businesses that sell healthy drinks–like water or milk–can be eligible for a tax credit of up to $2,000 against the Business Income and Receipts Tax (BIRT). Businesses calculate the credit amount by comparing the dollar amount it spends to buy healthy beverages from year to year.
Keystone Opportunity Zones (KOZs) are parcel-specific areas where property owners and/or businesses that meet capital investment or new employment targets pay little or no taxes through 2018 or 2025. These taxes include the Business Income and Receipts Tax, Use and Occupancy Tax, Real Estate Tax, Net Profit Tax, State Business Tax, and State sales tax on items consumed at the KOZ site. KOZ sites are located throughout the City, including industrial parks, high tech centers and the Navy Yard.
Businesses that provide health care benefits to life partners and their children may be eligible for a credit of lesser $4,000 or 25% of the amount expended by the business during the tax year to purchase coverage. Business that provide transgender people care coverage in their health insurance may be eligible for a credit of lesser $4,000 or 25% of the amount expended by the business during the tax year to purchase coverage.
The Philadelphia Re-Entry Employment Program (PREP) was established for securing job creating economic development opportunities for ex-offenders through the expansion of existing businesses and the attraction of economic development prospects for the City of Philadelphia.
Businesses located in the City of Philadelphia can be classified as certified sustainable businesses once they are certified as B Corporations. For tax years 2019 through 2022, an eligible business shall receive a tax credit of up to $4,000, which shall be used against the applicant’s total Business Income & Receipts Tax (BIRT). No more than 75 businesses will be certified as Sustainable Businesses in any one tax year. The credit cannot equal more than the total BIRT due per Line 3 of that return.
Businesses that employ United States military veterans may be eligible for tax credits. Credit can be taken for honorably discharged veteran employees who were hired within 10 years of their active full-time duty.