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Business & self-employment

Sales, Use, & Hotel Occupancy Tax

Due date
Tax rate

plus a 6% Commonwealth tax

Who pays the tax

Philadelphia has a Sales, Use, and Hotel Occupancy Tax that is added to Pennsylvania’s Sales, Use, and Hotel Occupancy Tax. When taxpayers file and pay Sales, Use, and Hotel Occupancy Taxes, they pay both taxes directly to the Pennsylvania Department of Revenue, not to the City of Philadelphia.

The City’s Sales Tax is charged on taxable goods and services by retailers and service providers (vendors). Vendors are required to collect this tax at the time of purchase, and then pay it to the Commonwealth of Pennsylvania.

The Use Tax applies to taxable goods and services when a vendor doesn’t collect Sales Tax from a customer. In this situation, purchasers file returns and pay the tax themselves.

Hotel operators are responsible for collecting Hotel Occupancy Tax from those who stay at their hotel.

Important dates

Due dates vary depending on whether you pay monthly, quarterly, semi-annually, or if you prepay. The Pennsylvania Department of Revenue posts a schedule of Sales, Use, and Hotel Occupancy Tax due dates on its website.

Tax rates, penalties, & fees

How much is it?

Sales & Use Tax

2% (City) + 6% (Commonwealth) = 8% (Total)

Hotel Occupancy Tax

1% (City) + 6% (Commonwealth) = 7% (Total)

The Hotel Occupancy Tax is in addition to the Hotel Room Rental Tax (8.5%) imposed by the City.

What happens if you don't pay on time?

If you don’t pay on time, interest and penalties will be added to the amount you owe.

Refer to the Commonwealth of Pennsylvania’s Sales, Use and Hotel Occupancy Tax information.

Discounts & exemptions

Are you eligible for a discount?

If you pay your taxes on or before the due date, you may be eligible for a 1% discount in the amount of tax you owe. Details are available in the Retailers’ Information Guide on the Commonwealth website.

Can you be excused from paying the tax?

The City of Philadelphia follows Commonwealth guidelines to determine which goods and services are taxable. If you sell items or provide services that aren’t on this list, you may be exempt from the tax.

Construction machinery and equipment exemption

The sale or use of construction machinery and equipment is exempt from sales and use taxes if all of the following apply.

The machinery or equipment is:

  • Sold to or used by a qualified business or a construction contractor.
  • Sold or used pursuant to a construction contract performed within one of the following zones:
    • Philadelphia’s Keystone Opportunity Zones,
    • Philadelphia Economic Development District, or
    • Philadelphia Strategic Development Area.
  • Used exclusively within the above-named zones.

This exemption includes distribution equipment when it has been purchased for the exclusive use, consumption, and/or utilization in a facility located within the zones.

How to pay

File and pay online

You must file your returns and pay the Sales, Use, and Hotel Occupancy Tax online through the Commonwealth of Pennsylvania’s myPATH system.