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July 01, 2019

Philly City Wage Tax dips slightly as part of ongoing reduction plan

Taxes Wages
12042018_philly_city_hall_TC Thom Carroll, File/PhillyVoice

Philadelphia City Hall.

For the third year in a row, Philadelphia's City Wage Tax has been reduced slightly as part of an overall plan to bring down the much-maligned rate.

The Department of Revenue announced Monday that the Wage Tax has decreased from 3.8809% to 3.8712% for Philadelphia residents. For non-residents, the tax will drop from 3.4567% to 3.4567% to 3.4481%. Earnings Tax percentages were also reduced for those whose employers do not collect the Wage Tax.

While the difference in your paychecks won't be massive, the reduction is part of strategy to lower the tax burden on the city's workforce and increase Philadelphia's competitiveness.

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The high point for the wage tax came between 1985-1995, when it was 4.96%. Successive mayors have worked to gradually chip away at the tax.

By 2022, the city aims to reduce the wage tax to its lowest percentage in 40 years. At that point, residents can expect the rate to fall to 3.6997%. Non-residents will pay at a rate of 3.2953%.

The current changes effective July 1 also apply to the Earnings Tax, Net Profits Tax and School Income Tax.