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June 19, 2017

Philly city wage tax to go down slightly in July

Taxes Employment
Carroll - City Hall and Benjamin Franklin Parkway Thom Carroll/PhillyVoice

Philadelphia City Hall from the Parkway.

If you live in the city of Philadelphia or are otherwise on the hook to pay its wage tax, the month of July will bring some good news for your wallet.

A scheduled reduction in the City Wage Tax will take effect July 1 as part of an ongoing process to reduce the burden on residents and increase competitiveness. 

For residents of Philadelphia, the wage tax will fall from 3.9004 percent to 3.8907. For non-residents who are subject to the wage tax, the new rate will be 3.4654.

Any paycheck issued by businesses after June 30, 2017 must have Philadelphia City Wage Tax withheld at the new rate.

The high point for the wage tax came in 1985, when it was 4.96 percent. 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 percent. Non-residents will pay at a rate of 3.2953 percent.

Starting in tax year 2017, the current changes will also apply to the Earnings Tax, Net Profits Tax and School Income Tax.