Selling Taxable Items or Services in Philadelphia or Allegheny Counties?

Enforcement of Collecting and Remitting Local Sales Tax in Philadelphia County and Allegheny County Begins October 1, 2026

Pennsylvania recently enacted Act 21 of 2026, which changes how local sales tax must be collected on taxable sales delivered to customers in Philadelphia County and Allegheny County. If your business sells taxable products or services to customers in either county, you may now be required to collect and remit the applicable local sales tax in addition to Pennsylvania’s 6% state sales tax.

Under the new rules, vendors must collect:

• Philadelphia County: 2% local sales tax on taxable sales delivered to customers in Philadelphia County
• Allegheny County: 1% local sales tax on taxable sales delivered to customers in Allegheny County

According to an email from the Pennsylvania Department of Revenue dated August 19, 2026, “This legislative change became law with enactment on July 12, 2026, with a retroactive effective date of tax years after December 31, 2025. That means that vendors must make every effort to start collecting and remitting local sales taxes as soon as possible.

However, the Department of Revenue understands that vendors may need time to adjust to this change in law. As a result, the department will not begin enforcing these new rules until October 1, 2026.”

What Changed?

Before this law change, local sales tax was generally based on the point of sale — meaning where the vendor was located.

Now, local sales tax is based on the destination — meaning where the taxable product or service is delivered. In other words, if a taxable sale is delivered to a customer in Philadelphia County or Allegheny County, the local sales tax for that county may apply.

What Has Not Changed

The following rules remain the same:

• Pennsylvania state sales tax: Vendors must continue to collect the state’s 6% sales tax when selling taxable products or services.

• State and local use tax: If sales tax is not collected at the time of purchase, purchasers may still owe use tax when taxable products or services are used in Philadelphia County or Allegheny County.

What Businesses Should Consider Now

• If you sell taxable products or services to customers in Philadelphia County or Allegheny County, consider reviewing whether your invoicing, point-of-sale, e-commerce, accounting, and sales tax reporting systems are set up to collect the correct local tax based on the customer’s delivery location.

Need More Information?

• Use the Online Customer Service Center to securely submit a question to the Pennsylvania Department of Revenue
• Call the Pennsylvania Department of Revenue at 717-787-1064

As always, should you have questions on this or other matters affecting you or your business, please call 215.675.8364 or email us to speak with a CPA today.

DISCLAIMER: All communications by Wouch, Maloney & Co., LLP intend to provide general information, as of the date of the communication, and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. Please be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.