On this page: Important information - October 2020 updates; Tax tables updated that apply from 13 October 2020 The 8% sales tax rate in Philadelphia consists of 6% Pennsylvania state sales tax and 2% Philadelphia County sales tax.There is no applicable city tax or special tax. Some of those modifications may be significant. The Philadelphia's tax rate may change depending of the type of purchase. DISCLAIMER: The WM Daily Update COVID-19, COVID-19 Business Resources and COVID-19 Client News Alerts and other related communications are intended to provide general information on legislative COVID-19 relief measures as of the date of this communication and may reference information from reputable sources. Employees who were not permitted to or did not change their tax status while working outside of the city will be able to apply for a refund after the end of the year for the days they worked outside of the city. Summary. The current city wage tax rate is 3.4481%. This reduction is part of a long-term initiative to reduce the Wage Tax for residents and non-residents to their lowest rates in 40 years by 2022. Philadelphia’s Net Profits Tax (NPT), which mirrors the Wage Tax, also increases for non-residents. The tax rate, currently 3.8809 percent for Philadelphia residents and 3.4567 percent for nonresidents who work in the city, gets reduced a little bit every year. The chart also shows if the state has a flat tax rate, meaning, only one rate of tax applies regardless of the wages paid; or alternatively, the highest marginal withholding rate according to the state's latest computer withholding formula. The Philadelphia City Wage Tax is a tax on salaries, wages, commissions, and other compensation. Pennsylvania Unemployment Tax. Residents of Philadelphia pay a flat city income tax of 3.93% on earned income, in addition to the Pennsylvania income tax and the Federal income tax.. Nonresidents who work in Philadelphia pay a local income tax of 3.50%, which is 0.43% lower than the local income tax paid by residents. The extra 0.9% tax for higher wage earners is called Additional Medicare Tax (super original, we know). The current city wage tax rate is 3.4481%. Last Updated: 29/11/2019 Tax Rates for Basis Year 2020. Tax rates for previous years (1985 to 2019) To find income tax rates from previous years, see the Income Tax Package for that year. Starting July 1, 2020, the Wage Tax rate rises to 3.5019% for non-residents of Philadelphia. Photo by Cupcake Media on Unsplash. Every 2020 combined rates mentioned above are the results of Pennsylvania state rate (6%), the county rate (0% to 2%). Starting in 2019, the minimum wage will gradually increase as follows: $13.25 on July 1, 2019 The next tax brackets jump to … The Pennsylvania Department of Labor & Industry, Office of UC Tax Services will mail the 2020 SUI rate notices, Form UC … This short report accompanies the 2020 increases in the National Living Wage (NLW) and National Minimum Wage (NMW). The wage tax rate for residents of Philadelphia was not increased and remains at 3.8712% (.038712). Pennsylvania Income Tax Rate. Tailored tax rates for salary, wages and pensions. PA State Personal Income tax rate is 3.07%: PA State Unemployment tax rate is .06%: City of Philadelphia Wage tax rates is 3.8712% for Philadelphia residents and 3.4481% for Non-residents. All … Employers Any paycheck issued with a pay date after June 30, 2020 must have Philadelphia City Wage Tax withheld at the new rate for non-residents. Wages subject to unemployment contributions for employers remains at $10,000. If your business withholds Wage Tax, all paychecks issued to non-residents with a pay date after June 30, 2020 must reflect the new rate. Today, the City of Philadelphia Department of Revenue sent an email announcing a wage tax increase for non-residents beginning July 1, 2020. If you’re filing your 2020 tax return, view our 2020 Tax Rates, Due Dates, and Filing Tips post. Pennsylvania levies a flat state income tax rate of 3.07%. The rate increase has an immediate impact on all businesses that operate in the city and have workers who live outside Philadelphia. City of Philadelphia Wage Tax – This is a tax on salaries, wages, and other compensation. 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For calendar year 2020, the NPT rates are 3.8712% (.038712) for residents and 3.5019% (.035019) for non-residents. The City of Philadelphia is increasing its Wage Tax rate for non-residents on July 1, 2020. The property tax rate … At its height, the Philadelphia Wage Tax reached 4.96% in 1985. 415 Sargon Way, Suite J Horsham, PA 19044, 1515 Market Street, Suite 1710 Philadelphia, PA 19102, Wilson Suites, Suite 201 3333 Renaissance Boulevard Bonita Springs, FL 34134, © Copyright 2020 Wouch Maloney & Co. LLP All Rights Reserved | Website by Mediaboom | Disclaimer. Pennsylvania Unemployment Tax – The Wage Base remains at $10,000 for 2020. The City Wage Tax is a tax on salaries, wages, commissions, and other compensation. Just like federal income taxes, your employer will withhold money to cover this state income tax. The Wage Tax rate for residents of Philadelphia remains 3.8712% (.038712). Any paycheck issued by businesses after June 30, 2017 must have Philadelphia City Wage Tax withheld at the new rate. The rate for residents, currently 3.8712% (.038712), will remain the same after July 1. Philadelphia does allow residents employees working in a Pennsylvania local earned income tax (EIT) jurisdiction to take a credit. The lowest rate applies to single and married taxpayers who file separate returns on incomes of up to $12,000 as of 2020. Pennsylvania's income tax rates were last changed eighteen years ago for tax year 2002, and the tax brackets have not been changed since at least 2001.. Pennsylvania has a flat income tax rate which applies to both single and joint filers. Residents of Philadelphia pay a flat city income tax of 3.93% on earned income, in addition to the Pennsylvania income tax and the Federal income tax.Nonresidents who work in Philadelphia pay a local income tax of 3.50%, which is 0.43% lower than the local income tax paid by residents. The ordinance reduces wage tax rates to zero for low-income residents, meaning those employees have an effective tax rate of 1.5% when combined with the Pennsylvania Intergovernmental Cooperation Authority (PICA) tax on residents, and to 1.5% for low-income nonresidents, effective July 1. The new Wage Tax rate for residents of Philadelphia is 3.8809% (.038809). 3.07% : Philadelphia City Wage Tax Rate . The wage tax will not increase for Philadelphia residents who also work in the city. FREE Paycheck and Tax Calculators Estimated Tax Payments: Every taxpayer shall make a declaration of estimated taxes for the current tax year if the amount payable as estimated taxes is at least $200.00. On December 20, 2018, Mayor Jim Kenney signed an ordinance that will raise the minimum wage for all Philadelphia municipal government workers, contractors, and subcontractors from the current rate of $12.20 per hour to $15.00 per hour by 2022. Until updated 2018 tax rates become available for Pennsylvania, the tax brackets shown above and used in the income tax calculator will be from tax year 2016. The City of Philadelphia has recently taken steps to respond to the economic impact of the COVID-19 pandemic. Any paycheck that businesses issue with a pay date after June 30, 2018 must have Philadelphia City Wage Tax withheld at the new rate. You must speak to your employer about changing your tax status. Non-resident employees, who had been working in the city but were now working from home outside of the city, can change their tax status and be exempt from the 3.4481% nonresident tax. City officials increased the non-resident wage tax rate this year from 3.4481% to 3.5019% for fiscal year 2021 to try to make up for some of the expected revenue losses. Mailing of 2020 rate notices. The new Wage Tax rate for non-residents of Philadelphia who are subject to the Philadelphia City Wage Tax is 3.5019% (.035019). The rate as of July 1, 2019 for residents of Philadelphia decreases from 3.8809% to 3.8712%, and the rate for nonresidents of Philadelphia decreases from 3.4567% to 3.4481%. There is no special rate for Philadelphia. The ordinance maintains for the first half of 2020 the system of reducing the standard wage tax rates … Tax tables for previous years are also available at Tax rates and codes. Tax Rate Changes for 2020 The Social Security Administration (SSA) has announced that the 2020 Social Security wage base will be $137,700, an increase of $4,800 from the 2019 wage base of $132,900. The SUI taxable wage base will continue at $10,000 for 2020. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. All Philadelphia residents owe the City Wage Tax, regardless of where they work. 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