If you don’t pay your taxes on time, you will be charged interest and penalty fees in addition to the taxes you already owe.
Interest and penalty rates change over time. When your taxes are overdue for a long time, it’s possible for you to be charged different amounts of interest and penalty fees for different periods of time. For example, taxes that were due before January 1, 2016, have interest and penalty fees added at the rates that were in effect at the time. If the tax debt is still outstanding on or after January 1, 2016, the amount of interest and penalties you’re charged increases in correspondence with the rate change.
Current interest rate
Previous interest rates
For calendar year 2022, interest was charged at the rate of 5% per year, 0.42% of the unpaid balance per month.
For calendar year 2021, interest was charged at the rate of 5% per year, or 0.42% of the unpaid balance per month.
For calendar year 2020, interest was charged at the rate of 7% per year, or 0.583% of the unpaid balance per month.
For calendar year 2019, interest was charged at the rate of 8% per year, or 0.67% of the unpaid balance per month.
For calendar year 2016 through calendar year 2018, interest was charged at the rate of 6% per year, or 0.5% of the unpaid balance per month.
Effective January 1, 2014, through December 31, 2015, for all taxes except Liquor Tax and Real Estate Tax, interest was charged at the rate of 0.416% of the unpaid balance per month.
Taxes that were due on or before December 31, 2013, are subject to interest at the rate of 1% per month or fraction of each month until December 31, 2013.
In addition to interest, you can also be charged penalty fees for late tax returns and payments.
Penalty is currently charged at the rate of 1.25% per month, and has remained the same since January 1, 2014, for all taxes except Liquor Tax and Real Estate Taxes.
Penalty rates prior to 2014
Before January 1, 2014, the City enforced a graduated penalty rate for one year. A graduated rate means that the longer your return or payment is overdue, the greater the rate at which you’re charged penalties.
|Time elapsed after due date||Corresponding penalty rate|
|1st through 3rd month||1% per month or fraction thereof|
|4th through 6th month||2% per month or fraction thereof|
|7th through 9th month||3% per month or fraction thereof|
|10th through 12th month||4% per month or fraction thereof|
Under the graduated rate system, after 12 months have passed, the total penalty charged is 30% of the unpaid tax. After that, penalty is charged at the rate of 1.25% per month or fraction thereof.
Real Estate Tax interest & penalties
Real Estate Tax is due by March 31 of each tax year. If a taxpayer fails to pay their Real Estate Tax on time, charges (called “additions”) will be added to the principal amount of the tax. Additions accrue at the rate of 1.5% per month beginning April 1, and continue increasing by 1.5% each month until January 1 of the following year.
|Time elapsed after due date||Additions to Tax|
From April to January, the total amount of additions is 15% of the principal amount due and booked additions.
If the taxes remain unpaid on January 1 of the following year:
- A 15% “addition” is added to the principal balance;
- The taxes are registered as delinquent;
- A $106.45 lien charge is added; and
- You become responsible for paying legal fees (18% if an outside firm collects on behalf of the city, or a 6% fee if the City collected for itself).
Beginning in February and ending in August of the year in which the lien is filed, penalties accrue on the Tax Claim Principal Amount at the rate of 1% per month. The total penalty, which aggregates to 7%, accrues only during the period from February to August.
Interest also accrues on the Tax Claim Principal Amount at the rate of 0.75% per month, or 9% per year, beginning January 1 of the year in which the lien was filed. Interest continues to accrue until the taxes are paid.
Collection costs related to the Tax Claims are also charged at the time of settlement.
How to appeal interest & penalty charges
You have the right to appeal any interest and penalty charges. The appeals process varies depending on how much interest and penalty your account has built up.
If your accrued interest is under $15,000 and your accrued penalty is under $35,000, you can download and complete a Petition for Waiver of Interest and Penalty. Send the completed form to:
Interest and Penalty Appeals
Philadelphia Dept. of Revenue
1401 John F. Kennedy Blvd.
Philadelphia, PA 19102
If your interest and penalty charges exceed the above amounts, you must contact the Tax Review Board to file an appeal.