of the assessed value of the property, with a $2,000 annual tax exemption
Who pays the tax
You have to pay the Use and Occupancy (U&O) Tax if:
- Your business is physically located in Philadelphia.
- You operate your business from your Philadelphia residence.
- You, your tenants, or your sub-tenants use your Philadelphia property for business purposes.
Any owner or landlord whose property is used for business purposes is responsible for filing and paying this tax. The owner or landlord must collect the tax from tenants and pay it to the City, along with any tax for which the owner or landlord is liable.
Anyone responsible for filing a return and paying the tax must do so whether or not they receive a tax return.
The Use and Occupancy Tax must be filed and paid monthly on the 25th of each month. If the 25th falls on a weekend or holiday, the return is due on the first business day after the 25th.
For exact due dates, you can refer to the Use and Occupancy Tax schedule of due dates.
Tax rates, penalties, & fees
How much is it?
The Use and Occupancy Tax rate is 1.21% of the assessed value of a property, with a $2,000 annual tax exemption.
Beginning July 1, 2015, an exemption of $165,300 applies to the assessed value of each property used for business. This translates into a $2,000 annual tax exemption ($167 per month or $500 per quarter). If there are multiple businesses using or occupying the same property, the $2,000 tax exemption is divided equally among them. Landlords must inform tenants of the number of users or occupiers of the property so they’re aware of how the exemption should be divided.
The Office of Property Assessment determines the value of your property. If you disagree with your property assessment, you can file an appeal with the Board of Revision of Taxes (BRT). Appeal applications are due by the first Monday in October prior to the tax year for which you are requesting a revision. (For example, the due date for 2016 appeals was October 5, 2015.)
If your property was recently reassessed, you may owe a higher Use and Occupancy tax.
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.
For more information about rates, see our Interest, penalties, and fees page.
If you accrue interest over $15,000 or penalty over $35,000, you may qualify for a waiver of interest and penalty above these amounts. To apply, you’ll need to complete a Petition for tax appeal through the City’s Tax Review Board.
Discounts & exemptions
Are you eligible for a discount?
If you are responsible for collecting Use and Occupancy Tax from tenants, you can receive a 1% discount on the total tax if the payment is submitted on or before the 25th of the month the tax is due.
However, if you are the owner of the property and owe a portion of the tax because you operate a business there, the discount cannot be applied to your portion.
Can you be excused from paying the tax?
Portions of your property may be excluded from the assessed value when determining the Use and Occupancy Tax. This results in a lower total tax amount owed. Exemptions include:
- The portion of real estate used for living space. Residential rental activity is not subject to the tax. When a tenant uses the property as both a residence and a place of business, only the area used for living space is exempt from the tax.
- Real estate subject to the Pennsylvania Sales, Use, and Hotel Occupancy Tax.
- The portion of real estate used for nonprofit business purposes. To be excused from collecting tax from a nonprofit, a landlord must obtain a copy of the nonprofit’s Federal Exemption Notice. The landlord must submit this document with the first tax return filed after receiving it.
- The portion of real estate used for port-related activities like piers, wharves, and marine terminal facilities. Exempt property areas must touch or enter either the Delaware or Schuylkill River and fall within City limits.
- Vacant commercial properties, or portions of commercial properties that are not currently in business use.
Exemptions are not granted automatically. You must report them when you file a Use and Occupancy Tax return.
How to pay
The Use and Occupancy tax must be filed online through the City’s eFile/ePay site.
To file your taxes online, you’ll need both:
- Any one of the following types of identification or account numbers:
- Federal Entity Identification Number (EIN)
- Social Security Number (SSN)
- Philadelphia Tax Account number
- Your Philadelphia Department of Revenue PIN (personal identification number)
If paying by eCheck on the City’s ePay site, you’ll need:
- Your bank’s nine-digit routing number
- Your savings or checking account number
Payments made by eCheck are handled free of charge.
A processing fee will apply to credit and debit card payments.