The Wage Tax is a tax on salaries, wages, commissions, and other compensation. The tax applies to payments that a person receives from an employer in return for work or services. All employed Philadelphia residents owe the Wage Tax, regardless of where they work. Non-residents who work in Philadelphia must also pay the Wage Tax.

All employers located in Pennsylvania are required to register with the City of Philadelphia within 30 days of becoming an employer of either:

• A resident of Philadelphia, or
• A non-resident of Philadelphia who performs services for an employer in Philadelphia.

Employers are required to withhold the Wage Tax from all employees who meet these criteria.

Proposed rate reduction starting in 2025

Mayor Parker, along with City Council, have made significant changes to Philadelphia’s tax structure starting in Tax Year 2025. The Wage Tax, among other tax rates, has changed. Over the next five years, the resident and non-resident Wage Tax rates will go down. Sign up for our newsletter–just for these tax changes–to learn about upcoming webinars and resources to support your businesses in this transition.

Quarterly filing schedule

All Quarterly Wage Tax reconciliations and corresponding schedules must be filed on the Philadelphia Tax Center. Annual reconciliations are not needed anymore with the Tax Center’s implementation.  

Payment frequency

As an employer, your payment filing frequency is determined by the amount of Wage Tax you withhold.

How much is it?

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.

Interest and penalty is due on any unpaid taxes at the rate specified by Philadelphia Code 19-509.

For more information about rates, see our Interest, penalties, and fees page.

Are you eligible for a discount?

Income-based Wage Tax refund

If you have tax forgiveness under PA 40 Schedule SP, you may be eligible for an income-based Wage Tax refund. A taxpayer (residents or non-resident) with PA tax forgiveness pays Wage Tax at a reduced 1.5% rate. You’ll receive a refund for any Wage Tax above the 1.5% discounted rate.

To apply for an income-based Wage Tax refund, you’ll need to attach your completed Pennsylvania Schedule SP. The City of Philadelphia will check to make sure your Schedule SP matches the state’s records.

Non-Pennsylvania residents who work in Philadelphia but do not file a Pennsylvania income tax return must include a signed copy of their state income tax return to be eligible for the income-based rates.

Refunds for time worked outside Philadelphia

If you pay more Wage Tax than is due, you can file a claim to have the excess amount refunded to you. This might happen if you’re a non-resident and your employer withholds Wage Tax for time you spent working outside Philadelphia. To receive that portion of Wage Tax back, you’ll need to request a Wage Tax refund.

Can you be excused from paying the tax?

Some forms of income are exempt from the Wage Tax. These include:

• A scholarship received as part of a degree program, for which you do not provide a service
• Pension payments
• Benefits arising under the Workmen’s Compensation Act
• Active military service pay and bonuses
• Death benefits
• Employer-paid health insurance premiums (uniformly provided to all employees)
• Witness and juror fees
• Sick or disability benefits
• Proceeds of life insurance policies