Philadelphia Wage Tax Calculator
Accurately model your take-home pay with Philadelphia's official July 1, 2026 reduced wage tax rates: 3.735% for residents and 3.425% for non-resident commuters, combined with Pennsylvania's 3.07% flat state tax and real 2026 federal brackets.
Calculate Your Philadelphia Take-Home Pay
Philadelphia Wage Tax Rates 2026 (Official)
| Taxing Standard / Jurisdiction | 2026 Rate | Statutory Rule & Notes |
|---|---|---|
| Philadelphia wage tax — resident | 3.735% | Effective July 1, 2026 |
| Philadelphia wage tax — non-resident working in Philadelphia | 3.425% | Effective July 1, 2026 |
| Pennsylvania state income tax | 3.07% flat | No standard deduction — taxed from the first dollar |
| Federal income tax + FICA (7.65%) | Calculated by the tool above | IRS 2026 withholding schedules & FICA wage base |
Rates are set by the City of Philadelphia Department of Revenue and apply from July 1, 2026. Philadelphia residents owe the wage tax on wages earned anywhere; non-residents owe it only on wages earned in Philadelphia. The wage tax is charged on gross wages alongside Pennsylvania's flat 3.07% state tax — the calculator above applies both.
Local Services Tax (LST): Philadelphia has no separate Local Services Tax (LST) and the wage tax applies instead (verified via City of Philadelphia Department of Revenue tax schedules at phila.gov/taxes).
Worked Paycheck Examples: Resident vs. Commuter
Below is the exact paycheck math for a full-time worker earning $30.00/hour (40 hours/week = $62,400 gross) under single filing status with 2026 federal brackets, 7.65% FICA, 3.07% PA state tax, and the July 1, 2026 Philadelphia wage tax rates.
| Withholding Component | Calculation Rule | Example 1: Philly Resident | Example 2: NJ Commuter |
|---|---|---|---|
| Annual Gross Pay | $30.00/hr × 40 hrs × 52 weeks | $62,400.00 | $62,400.00 |
| 2026 Federal Standard Deduction | Single filer ($16,100) | −$16,100.00 | −$16,100.00 |
| Federal Taxable Income | Gross − Standard Deduction | $46,300.00 | $46,300.00 |
| Federal Income Tax | 10% to $12,400 ($1,240) + 12% to $46,300 ($4,068) | −$5,308.00 | −$5,308.00 |
| FICA Taxes (7.65%) | 6.2% Social Security ($3,868.80) + 1.45% Medicare ($904.80) | −$4,773.60 | −$4,773.60 |
| PA State Income Tax (3.07%) | Flat 3.07% on gross compensation ($62,400 × 0.0307) | −$1,915.68 | −$1,915.68 |
| Philadelphia Wage Tax | Resident: 3.735% • Non-Resident: 3.425% | −$2,330.64 | −$2,137.20 |
| Total Deductions & Taxes | Federal + FICA + PA + Philadelphia | −$14,327.92 | −$14,134.48 |
| Net Annual Take-Home Pay | Gross − Total Deductions | $48,072.08 | $48,265.52 |
| Bi-Weekly Paycheck (26 checks) | Annual Net ÷ 26 | $1,848.93 / check | $1,856.37 / check |
At $62,400 gross pay, a non-resident commuting from Camden or Cherry Hill, NJ keeps an additional $193.44 per year ($7.44 per bi-weekly paycheck) compared to a coworker living in Center City, owing to the 0.310% non-resident rate discount (3.425% vs. 3.735%).
Philadelphia Take-Home Pay by Salary ($50,000 – $100,000)
Estimated net take-home pay and bi-weekly paycheck amounts for single Philadelphia residents with no pre-tax deductions, applying the 2026 federal brackets, 7.65% FICA, PA 3.07% flat tax, and the July 1, 2026 Philadelphia resident rate of 3.735% (reusing the page's $62,400 calculation method).
| Annual Gross Salary | Federal Tax (2026) | FICA (7.65%) | PA State Tax (3.07%) | Philly Wage Tax (3.735%) | PA UC (0.07%) | Total Deductions | Annual Net Pay | Bi-Weekly Paycheck |
|---|---|---|---|---|---|---|---|---|
| $50,000.00 | −$3,820.00 | −$3,825.00 | −$1,535.00 | −$1,867.50 | −$35.00 | −$11,082.50 | $38,917.50 | $1,496.83 / check |
| $65,000.00 | −$5,620.00 | −$4,972.50 | −$1,995.50 | −$2,427.75 | −$45.50 | −$15,061.25 | $49,938.75 | $1,920.72 / check |
| $80,000.00 | −$8,770.00 | −$6,120.00 | −$2,456.00 | −$2,988.00 | −$56.00 | −$20,390.00 | $59,610.00 | $2,292.69 / check |
| $100,000.00 | −$13,170.00 | −$7,650.00 | −$3,070.00 | −$3,735.00 | −$70.00 | −$27,695.00 | $72,305.00 | $2,780.96 / check |
Calculation methodology: Single filers claiming the standard deduction ($16,100), 2026 federal brackets, FICA (6.2% Social Security + 1.45% Medicare), PA flat 3.07%, Philadelphia resident rate 3.735%, and PA UC 0.07%. Standard 4-tax baseline without PA UC: $50,000 = $38,952.50 annual ($1,498.17 bi-weekly); $65,000 = $49,984.25 annual ($1,922.47 bi-weekly); $80,000 = $59,666.00 annual ($2,294.85 bi-weekly); $100,000 = $72,375.00 annual ($2,783.65 bi-weekly).
Understanding the Philadelphia Wage Tax
1. Who Pays: Resident vs. Non-Resident Rules
The Philadelphia Wage Tax is a municipal tax on salaries, wages, commissions, and other employee compensation. Liability depends strictly on residency and the physical location where services are rendered:
- Philadelphia Residents (3.735%): If your primary domicile is within the City and County of Philadelphia, you owe 3.735% on all compensation earned from any employer, anywhere in the world. Living in Fishtown, South Philly, or West Philly means you pay this rate even if your office is in King of Prussia, New Jersey, or you telecommute for a tech firm headquartered in Austin.
- Non-Residents (3.425%): If you reside outside Philadelphia (such as Bucks, Montgomery, Chester, or Delaware counties in PA, or in South Jersey or northern Delaware), you owe 3.425% only on compensation earned for work performed physically within Philadelphia.
If you are a non-resident and your employer requires you to work remotely outside Philadelphia, you are not subject to wage tax on those remote days. Under Philadelphia Department of Revenue policy, days worked from a home office outside the city because of employer direction are exempt from wage tax.
If your employer withheld wage tax for 100% of your days, you can claim a refund by filing the annual Wage Tax Employee Refund Petition (Form W-2) with the Philadelphia Department of Revenue. You must submit:
- A completed Wage Tax Refund Petition Form (available on the Philadelphia Tax Center).
- A signed Employer Verification Letter on company letterhead confirming your physical work location, total remote days, and certifying that remote work was required by the employer.
- Copies of your W-2 showing local Philadelphia wage withholding (Box 19).
Note: Days worked remotely outside Philadelphia solely for your own convenience (when an office desk was available to you in Philadelphia) historically did not qualify for refunds under the city's convenience-of-the-employer doctrine. Always maintain written telework agreements and badge-swipe or calendar audit trails.
2. How Philadelphia Withholding Works
Philadelphia's wage tax operates under the authority of the Sterling Act of 1932 (53 P.S. § 15971), which predates Pennsylvania's general local earned income tax statute (Act 32). Because of the Sterling Act:
- Employer-Level Withholding: All employers located in Philadelphia or doing business in the city are required by law to withhold wage tax from each paycheck and remit it to the city on a designated schedule (semi-monthly, monthly, or quarterly depending on withholding volume).
- No Annual Employee Tax Return: Unlike Pennsylvania's Act 32 jurisdictions where residents must file an annual local tax return (Form 32), W-2 employees in Philadelphia do not file an annual city wage tax return unless they are requesting a refund for over-withholding or out-of-city work days. Withholding on your pay stub satisfies your full municipal tax liability.
- Remittance Portal: Employers report and pay Philadelphia wage withholding electronically through the Philadelphia Tax Center (
tax-services.phila.gov).
3. The July 1 Rate-Change History & Five-Year Plan
Unlike federal and state income tax brackets that update on January 1, Philadelphia's wage tax adjustments take effect on July 1 each year, corresponding to the start of the City's fiscal year.
The Paycheck Date Rule: Wage tax withholding is determined by the paycheck issue date, not the period in which the hours were logged. A paycheck issued on July 2, 2026 for hours worked in late June must use the new 3.735% resident / 3.425% non-resident rate.
These rates are part of City Council's multi-year tax reduction program aimed at boosting regional economic competitiveness. Here is the recent rate trajectory:
| Effective Period | Resident Rate | Non-Resident Rate | Legislative Context |
|---|---|---|---|
| July 1, 2021 – June 30, 2022 | 3.8398% | 3.4481% | Pre-reduction baseline |
| July 1, 2022 – June 30, 2023 | 3.7900% | 3.4400% | First post-pandemic reduction step |
| July 1, 2023 – June 30, 2025 | 3.7500% | 3.4400% | City Council stabilized reduction |
| July 1, 2025 – June 30, 2026 | 3.74% | 3.43% | Fiscal Year 2026 rate reduction |
| July 1, 2026 – Present | 3.7350% | 3.4250% | Current verified schedule |
| July 1, 2027 (Scheduled) | Target: ~3.700% | Target: ~3.400% | Five-year reduction goal phase |
Next scheduled change: July 1, 2027, target ~3.70% / ~3.40%
4. Self-Employed Philadelphians: NPT & BIRT (Not Wage Tax)
If you work in Philadelphia as an independent contractor (1099-NEC/1099-MISC), sole proprietor, partner, or single-member LLC, you do not pay the Wage Tax. Instead, you are governed by Philadelphia's commercial tax structure:
- Net Profits Tax (NPT): Imposed on the net profit generated by any trade, business, profession, or commercial enterprise conducted in Philadelphia. The NPT rate matches the wage tax rate (3.735% for residents on all net profit; 3.425% for non-residents on Philly-apportioned profit). Unlike the wage tax, which taxes gross pay without expense deductions, NPT allows ordinary and necessary business expense deductions.
- Business Income & Receipts Tax (BIRT): Applies to all commercial entities operating within Philadelphia. BIRT includes two separate taxes: one on gross receipts (with the first $100,000 of receipts exempt) and another on net taxable business income.
How do I calculate my Philadelphia City Wage Tax?
To calculate your Philadelphia City Wage Tax, you multiply your gross pay for the pay period by the local tax rate corresponding to your residency status: 3.735% for Philadelphia residents or 3.425% for non-residents working within city boundaries. This municipal tax applies strictly to earned income, encompassing gross wages, salaries, incentive commissions, bonuses, and severance pay. Unlike a municipal property tax, real estate tax, or local sales tax, the Philadelphia wage tax never touches unearned income such as investment dividends, interest earnings, capital gains, or retirement pensions. If you are an employee, your company automatically deducts this local withholding on every Pennsylvania paycheck and remits the funds directly to the city. If an employer accidentally withholds excess tax—or if a non-resident performs work outside city limits at their employer's mandate—the difference is not settled on an annual local tax return, but must be recovered by filing an official employee tax refund petition directly with the city Department of Revenue. For complete gross-to-net paycheck calculations factoring in federal brackets and state taxes, use the interactive paycheck calculator above.
How much is the Philadelphia Wage Tax?
The Philadelphia Wage Tax rate is currently 3.735% for city residents and 3.425% for non-residents working in Philadelphia (effective July 1, 2026). As a mandatory municipal earnings tax, it constitutes Philadelphia city's single largest tax revenue source, levied directly on the earned income of all W-2 workers without personal exemptions or standard deductions. Over recent decades, the rate trajectory has been defined by steady tax reduction: City Council implements incremental rate cuts every July 1 as part of an ongoing five-year tax reform schedule designed to foster regional economic growth (the complete historical table sits directly above on this page). Crucially, unlike federal or state income systems, no personal tax credits—such as child credits or education deductions—are permitted to reduce the wage tax liability itself. This employee levy operates completely distinct from Philadelphia's separate business taxes—specifically the Business Income and Receipts Tax (BIRT) and the Net Profits Tax (NPT) for independent contractors—and sits strictly on top of the Commonwealth of Pennsylvania's flat 3.07% state income tax. Any worker who overpays this municipal withholding due to remote work or employer error must petition the city for an administrative tax refund.
How much tax is taken out of my paycheck in Philadelphia?
On a standard $1,000 gross weekly paycheck for a resident, approximately $220 is deducted across federal, state, and local taxes, leaving a net paystub amount of roughly $780. Walking down your paycheck stub illustrates how withholding works. First, federal income tax is deducted based on federal tax brackets and your W-4—the only deduction on your pay stub that varies by personal status. Next, statutory FICA takes $62.00 for Social Security (6.2%) and $14.50 for Medicare (1.45%). Below federal withholdings, Pennsylvania levies its flat 3.07% income tax, taking $30.70. Finally, the Philadelphia wage tax deducts $37.35 under the verified 3.735% resident tax rate. Withholding begins with your very first paycheck, as the city offers no grace period. While your annual federal tax bill reconciles upon filing, city withholding is final unless requesting an out-of-city refund. Every line named here appears on your own pay stub, and the interactive paycheck calculator and tax calculator above reproduces this exact breakdown for your specific earnings.
Do I pay Philly Wage Tax if I live in NJ?
Yes, you must pay the Philadelphia Wage Tax if you live in New Jersey but physically commute to work within Philadelphia in 2026. Under municipal law, living in New Jersey does not exempt you from local payroll withholding: non-residents are subject to the reduced 3.425% tax rate on all compensation earned within city borders, which is automatically withheld by your employer. Although New Jersey and the Commonwealth of Pennsylvania share a reciprocal personal income tax agreement, that reciprocal pact explicitly excludes local municipal taxes authorized by the Sterling Act. Instead, financial relief is handled when you file your annual New Jersey tax return (Form NJ-1040). The State of New Jersey grants a dollar-for-dollar tax credit on Schedule NJ-COJ against Jersey state income tax for the local wage tax paid to Philadelphia, ensuring that your earnings are not subject to double taxation across state lines regardless of your applicable state tax brackets. In situations where an out-of-state employer fails to withhold the required municipal tax, the employee remains legally responsible to register with the Philadelphia Department of Revenue through the official Tax Center and pay the balance directly.
What is the current Philadelphia wage tax rate? (resident vs non-resident)
Effective July 1, 2026, the current Philadelphia wage tax rate is 3.735% for city residents and 3.425% for non-residents who work within city boundaries. This local wage tax is withheld on every paycheck alongside Pennsylvania's flat 3.07% state income tax, 0.07% PA unemployment compensation (UC) tax, 7.65% FICA, and federal income tax. Because municipal tax reduces gross pay before money reaches your bank account, your true net take-home pay reflects all four tax layers: on a $1,000 weekly gross paycheck, a Philadelphia resident has $37.35 deducted in city wage tax, $30.70 in PA state tax, $0.70 in PA UC, and $76.50 in FICA, leaving an estimated net take-home pay of roughly $780 to $815 depending on federal W-4 withholding. A non-resident commuter pays $34.25 in wage tax on that same $1,000 check, retaining higher net take-home pay.
Who is considered a resident for Philadelphia wage tax purposes?
You are considered a resident for Philadelphia wage tax purposes if your primary domicile is located within the City and County of Philadelphia. Residency directly dictates your net take-home pay: Philadelphia residents owe the 3.735% resident rate on 100% of their earned compensation, regardless of where their employer is located or where the work is performed. Even if you commute to suburban counties, work in New Jersey, or telecommute for an out-of-state company from your Philadelphia home, you owe the resident rate on all wages. Non-residents, in contrast, pay the lower 3.425% rate strictly on compensation earned for days physically worked within Philadelphia city limits, resulting in higher net take-home pay for non-resident commuters on out-of-city work days.
I work remotely for a Philadelphia-based company but live outside the city — do I pay the wage tax?
If you live outside Philadelphia and your employer requires you to work remotely from outside the city, you do NOT owe Philadelphia wage tax on those remote work days. Under City of Philadelphia Department of Revenue policy, non-residents are taxed at the 3.425% rate solely on compensation for days physically worked within Philadelphia city limits. If your employer withheld wage tax for 100% of your days, you can claim a refund by filing the annual Wage Tax Employee Refund Petition (Form W-2) accompanied by an Employer Verification Letter, recovering that 3.425% deduction and increasing your annual net take-home pay. However, Philadelphia residents do not qualify for remote refunds; residents owe 3.735% on all earnings regardless of where work occurs.
How is the Philadelphia wage tax collected / withheld from a paycheck?
The Philadelphia wage tax is collected through mandatory employer payroll withholding authorized by the Sterling Act of 1932 (53 P.S. § 15971). All employers located in Philadelphia or doing business in the city are legally required to withhold wage tax from every paycheck and remit the funds electronically to the city via the Philadelphia Tax Center (tax-services.phila.gov). Because the tax is deducted at the employer level, W-2 employees in Philadelphia do not file an annual city wage tax return unless claiming a refund for out-of-city work days. On your pay stub, the wage tax appears as a distinct local deduction alongside PA 3.07% state tax, 0.07% PA UC, and federal taxes, directly determining your final net take-home pay.
What if my employer doesn't withhold the Philadelphia wage tax?
If you are a Philadelphia resident or work in the city, but your employer fails to withhold the Philadelphia wage tax—such as an out-of-state remote employer—you remain legally responsible for paying the tax directly to the City of Philadelphia. When an employer does not withhold local tax, your weekly paycheck will appear to have higher take-home pay than normal, but this creates an unpaid tax liability that accrues interest and penalties. You must register through the Philadelphia Tax Center (tax-services.phila.gov) and make direct wage tax payments (3.735% for residents, or 3.425% on Philly-worked days for non-residents). Our paycheck calculator calculates your exact liability alongside PA 3.07% state tax and 0.07% PA UC so you know your true net take-home pay.
Are there exemptions to the Philadelphia wage tax?
Unlike federal or Pennsylvania state income taxes, the Philadelphia wage tax does not offer standard deductions, personal exemptions, or family tax credits. The tax applies to 100% of gross earned compensation—wages, salaries, bonuses, and commissions. However, unearned income is exempt: investment dividends, interest, capital gains, and pensions are not subject to the wage tax. In addition, non-resident workers are exempt on compensation for days worked remotely outside Philadelphia when directed by their employer. For all covered employment earnings, our calculator applies the verified statutory rates—3.735% for residents and 3.425% for non-residents, plus PA's 3.07% state tax and 0.07% PA UC tax—to calculate your accurate net take-home pay without assuming unverified exemptions.
Do freelancers / self-employed workers in Philadelphia pay wage tax, or BIRT instead?
Freelancers, independent contractors, and sole proprietors operating in Philadelphia do NOT pay the Philadelphia wage tax on their 1099 self-employment income. The wage tax applies exclusively to W-2 employee wages. Instead, self-employed workers are subject to Philadelphia's commercial tax structure: the Net Profits Tax (NPT) and the Business Income & Receipts Tax (BIRT). While NPT rates match the wage tax rates (3.735% resident / 3.425% non-resident), NPT is levied on net business profit after deducting ordinary business expenses, whereas wage tax applies to gross pay. BIRT taxes gross receipts (with the first $100,000 exempt) and net income. After factoring in federal self-employment tax (15.3%), PA 3.07% tax, and city business taxes, net take-home profit for freelancers is calculated entirely differently than a W-2 paycheck.
I live outside Philadelphia but work there — which rate applies to me?
If you reside outside Philadelphia (such as in Bucks, Montgomery, Chester, or Delaware County, or commuting from New Jersey or Delaware) but physically perform work within Philadelphia city limits, the non-resident wage tax rate of 3.425% applies to you (effective July 1, 2026). You owe this rate only on compensation for days you physically work inside the city. Because the non-resident rate (3.425%) is lower than the resident rate (3.735%), non-resident commuters keep slightly more net take-home pay than resident coworkers earning the identical gross wage. Combined with Pennsylvania's flat 3.07% state income tax, 0.07% PA UC tax, and federal withholdings, our calculator shows you the exact net take-home pay you will receive on each paycheck.
Frequently Asked Questions
Common questions about Philadelphia wage tax withholding, residency, and refund mechanics.
What is the philly wage tax rate?
3.735% resident / 3.425% non-resident from July 1, 2026.
What is the official Philadelphia wage tax rate for 2026?
From July 1, 2026, the official Philadelphia wage tax rate is 3.735% for city residents and 3.425% for non-residents who work in Philadelphia, set by the City of Philadelphia Department of Revenue. Pennsylvania's flat 3.07% state income tax applies on top.
Does the July 1 rate change apply to when hours were worked or the paycheck date?
Philadelphia wage tax withholding is determined strictly by the paycheck issue date (cash basis), not the dates the work was performed. Any paycheck with an issue or pay date on or after July 1, 2026 must be withheld at the new lower rates (3.735% resident / 3.425% non-resident), even if the pay period covers late June.
Can non-residents get a Philadelphia wage tax refund for working remotely?
Yes, non-residents who work remotely from a location outside Philadelphia may be eligible for a wage tax refund. Under City of Philadelphia Department of Revenue policy, non-residents are only taxed on compensation for days physically worked within Philadelphia city limits. If your employer requires you to work remotely from outside the city (e.g. from home in New Jersey, Delaware, or suburban PA counties), those remote work days are exempt. To claim a refund, employees file the annual Wage Tax Employee Refund Petition (Form W-2) accompanied by an employer verification letter certifying the non-Philadelphia work days.
Do Philadelphia residents owe wage tax if they work outside the city?
Yes. Philadelphia residents owe the 3.735% wage tax on 100% of their gross compensation, regardless of where their employer is located or where the work is performed. Even if you commute to Delaware County, work in New Jersey, or telecommute for a California company from your Philadelphia home, you owe the resident rate on all wages.
Do independent contractors and 1099 freelancers pay the Philadelphia wage tax?
No. The Philadelphia wage tax applies exclusively to W-2 wages and employer-paid salaries. Self-employed individuals, independent contractors, partners, and sole proprietors operating in Philadelphia do not pay wage tax; instead, they are subject to the Net Profits Tax (NPT) and the Business Income & Receipts Tax (BIRT). NPT rates mirror the wage tax rates (3.735% resident / 3.425% non-resident) but are calculated on net business profits rather than gross receipts.
How does the Philadelphia wage tax interact with Pennsylvania state income tax?
Pennsylvania collects a flat 3.07% state income tax on all taxable gross compensation. The Philadelphia wage tax is an additional municipal tax levied under the authority of the Sterling Act of 1932. They do not offset each other: a Philadelphia resident pays both 3.07% to the Commonwealth of PA and 3.735% to the City of Philadelphia, resulting in a combined state and local income tax rate of 6.805%.