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Daily Update COVID-19

City of Philadelphia Announces Wage Tax Rate Increase for Non-Residents Starting July 1, 2020

Today, the City of Philadelphia Department of Revenue sent an email announcing a wage tax increase for non-residents beginning July 1, 2020.

The new wage tax rate for non-residents of Philadelphia, who are subject to the Philadelphia city wage tax, is 3.5019% (.035019). The current city wage tax rate is 3.4481%.

The wage tax rate for residents of Philadelphia was not increased and remains at 3.8712% (.038712).

Be certain your payroll systems are updated to reflect the increased non-resident tax rate.

The July 1st city wage tax increase will take effect the same week that Philadelphia moves into the green phase for businesses to reopen.

Lost Revenue Stream

When Mayor Jim Kenney and Pennsylvania Governor Tom Wolf ordered nonessential employees to work from home due to the pandemic, some workers became eligible for tax relief in Philadelphia.   Non-resident employees, who had been working in the city but were now working from home outside of the city, can change their tax status and be exempt from the 3.4481% nonresident tax.  Employees who were not permitted to or did not change their tax status while working outside of the city will be able to apply for a refund after the end of the year for the days they worked outside of the city. Note that if you live in a municipality with its own earned income tax you may have to begin paying those taxes for the time you are working from home.

Update:  January 8, 2021:

For information regarding the City of Philadelphia Wage Tax Refund Request Form, please click here.

As always, if you have questions about this or other topics, please know we are available to speak by phone at 215-675-8364 or you may reach us via email at [email protected].

 

DISCLAIMER: The WM Daily Update COVID-19, COVID-19 Business Resources and COVID-19 Client News Alerts and other related communications are intended to provide general information on legislative COVID-19 relief measures as of the date of this 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. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this communication. Some of those modifications may be significant. As such, 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.

 

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