New Philadelphia City Wage Tax Rate Effective July 1, 2026

Residents of Philadelphia and nonresidents who work in the City of Philadelphia will pay a lower city wage tax beginning July 1, 2026.

According to a June 11, 2026, email from the Philadelphia Department of Revenue “The City of Philadelphia has updated its Wage Tax and Earnings Tax rates for both residents and nonresidents. The new rates take effect on July 1, 2026. 

As in FY26, the Wage Tax and Earnings Tax rates are decreasing in FY27, with further reductions through FY30. The rate cuts are part of a five-year, gradual tax-cut plan approved by the Philadelphia City Council in June 2025.”  

Update Payroll System with New Rates

If you are an employer, make certain to update your payroll system to withhold the new Philadelphia Wage Tax rates effective July 1, 2026. The new rates are: 

• Philadelphia residents: 3.735% 
• Philadelphia nonresidents: 3.425% 

Important reminder 

All earnings after June 30, 2026, must have Philadelphia City Wage Tax withheld at the new rate. The Department of Revenue recommends reviewing your payroll withholding rates now to ensure the correct rates are applied and to avoid withholding errors. 

NPT and SIT Tax

Please note that the Net Profits Tax (NPT) and School Income Tax (SIT) follow the same rate reduction schedule, but these changes become effective on January 1, 2027, instead of July 1, 2026. 

If you have questions or need assistance regarding City wage tax, please contact the Philadelphia Department of Revenue directly: 

• Email: revenue@phila.gov 
• Phone: (215) 686-6600 

Should you need clarification or 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.

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