Philly extends deadline for relief program, announces tax cuts

Philadelphia City Council approved a budget for Fiscal Year 2026 that reduces Wage and Earnings Tax rates, effective July 1, 2025. Residents will see their tax rate decrease to 3. 74% from 3. 75%, while non-residents will pay 3. 43%, down from 3.

44%. The budget also lowers the Net Profits Tax to 3. 74% for residents and 3. 43% for non-residents, reflecting a continued effort to lessen the tax burden on local businesses. The Business Income and Receipts Tax (BIRT) will drop to 5.

71% for net income, with a gradual phase-out of the gross receipts rate by 2038. Notably, the $100,000 BIRT exemption and $2,000 Use & Occupancy Tax exemption will expire, requiring all businesses to file these taxes moving forward. City officials emphasize the importance of consulting with tax professionals to navigate the upcoming changes. Additional resources will be available from the Mayor’s Business Action Team to assist entrepreneurs. Residents can sign up for newsletters to stay informed about future tax changes and available support.