Philadelphia’s Wage Tax has been around since 1939. The Wage Tax is a tax on salaries, wages, commissions, and other compensation. It’s usually withheld by your employer.

In Fiscal Year 2019, we collected $1.56 billion in Wage Tax. This accounts for 45% of all taxes paid to the City not including revenue from the Commonwealth of Pennsylvania and the Federal Government.

Here are 5 more things you should know about Philadelphia’s Wage Tax.

5. If you live in Philadelphia, you must pay the City Wage Tax. Non-residents who work in Philadelphia must also pay the Wage Tax. This is true even if they work from home for their own convenience and even if they have their employer’s approval. However, non-residents may be excused from paying Wage Tax for some telecommuting. We’ve published a blog post about when telecommuters may be excused from paying the Wage Tax.

4. If you are a Philadelphia resident and work in Pennsylvania, Wage Tax will be automatically withheld from your paycheck by your employer and paid to the City of Philadelphia on your behalf. If you think your employer is not withholding the right Wage Tax amount, you could still be liable for payment. For example, if your employer is not required to pay Wage Tax because they are located outside of Pennsylvania, you will need to register for an Earnings Tax account.

3. Most employers are required to file and pay Wage Tax according to the Wage Tax schedule. Any employer who uses an outside payroll service must file and pay the tax electronically. Philadelphia-based non-profits and academic institutions are also required to withhold Wage Tax from all workers’ paychecks and remit it to the City.

2. Wage Tax filing and payment due dates can vary. Wage Tax Annual Reconciliation is due on the last day of February each year. It has been extended to March 2 this year because February 29 falls on a Saturday.

1. People who meet the criteria can receive a refund of up to 0.5% on City Wage Taxes that their employer withheld from their paychecks. Find out if you are eligible for an income-based Wage Tax refund.

As of July 1, 2019, the Wage Tax rate for Philadelphia residents is 3.8712% and 3.4481% for non-residents – it’s lowest since 1976. Wage Tax rates can change every year, so check the Department of Revenue’s website or sign up to receive our emails for more information.