Quick answer: for pay dates from July 1, 2026, Philadelphia's wage tax is 3.735% for residents and 3.425% for non-residents. Residents pay it on all of their wages, wherever they work. Non-residents who work for a Philadelphia employer pay it too, except for days their employer requires them to work outside the city. Working from home by choice doesn't reduce the tax.
Current and selected past rates
The city lowers the rates a little every July 1 as part of a multi-year reduction plan.
| Pay dates from |
Resident |
Non-resident |
| July 1, 2022 |
3.79% |
3.44% |
| July 1, 2024 |
3.75% |
3.44% |
| July 1, 2025 |
3.74% |
3.43% |
| July 1, 2026 |
3.735% |
3.425% |
The rate that applies depends on the pay date, not the period you worked. A paycheck dated July 3, 2026 uses the new rates even if it covers work done in late June.
Residents: taxed on everything
If you live in Philadelphia, you owe the wage tax on all your earned compensation, whether you work downtown, in the suburbs, in another state or from your kitchen table. When your employer is outside the city and doesn't withhold the wage tax, you pay the same tax yourself as the earnings tax, filed through the Philadelphia Tax Center. It's the same tax and the same rate, just collected differently.
Non-residents: the "requirement of employment" test
If you live outside Philadelphia and work for a Philadelphia employer, the city applies what it calls a requirement of employment test. Days your employer requires you to work outside the city are not taxable. Days you work from home for your own convenience are still taxable, even if your employer allows it.
Suppose you live in Delaware County, earn $80,000, and your employer requires you to work at client sites outside the city two days a week:
- Withheld on everything: 3.425% × $80,000 = $2,740 a year
- Actually owed: 3.425% × ($80,000 × 60%) = $1,644 a year
That $1,096 difference can be claimed back with a Wage Tax refund petition. Both you and your employer sign it, and you list the days you were required to work outside Philadelphia. You can file it online through the Philadelphia Tax Center, and refund claims must be made within three years.
If instead you simply choose to work from home two days a week, the full $2,740 is owed and there's nothing to refund.
For a resident on the same $80,000 salary, the tax is 3.735% × $80,000 = $2,988 a year, about $114.92 per biweekly paycheck, regardless of where they work.
Side-by-side at $50,000
|
Resident |
Non-resident, all work taxable |
Non-resident, required outside city 2 days a week |
| Taxable wages |
$50,000 |
$50,000 |
$30,000 |
| Rate |
3.735% |
3.425% |
3.425% |
| Wage tax per year |
$1,867.50 |
$1,712.50 |
$1,027.50 |
| Per biweekly paycheck |
$71.83 |
$65.87 |
$39.52 |
Try your own numbers, including PA state tax and federal tax, in the Philadelphia wage tax calculator.
What counts as taxable wages
The wage tax applies to salaries, wages, commissions, bonuses and most other compensation. Like Pennsylvania state tax, it does not exclude 401(k) contributions, so contributing to a traditional 401(k) won't reduce your wage tax. Health premiums paid through a cafeteria plan are generally excluded.
The low-income rate
Residents and non-residents who qualify for Pennsylvania's tax forgiveness program can pay a reduced income-based rate of 1.5%. Employers still withhold at the standard rate, so you claim the difference back from the city with a refund petition.
Commuters from New Jersey and other states
If you live in New Jersey and work in Philadelphia, you still owe the non-resident wage tax. New Jersey generally gives its residents a credit for the Philadelphia wage tax on their NJ return, which reduces what you owe New Jersey.
Moving in or out of Philadelphia mid-year
Residency is judged by where you lived on each pay date. If you move into the city on June 1, paychecks from June onward should use the resident rate; earlier paychecks use the non-resident rate, and only for taxable work in the city. Tell payroll the day you move. If withholding was wrong for part of the year, you either pay the difference as earnings tax or claim a refund.
The July rate change, in practice
The rate is set by the pay date. Someone earning $60,000 evenly through 2026, as a resident, pays about $30,000 × 3.74% for the first half of the year and $30,000 × 3.735% for the second, roughly $2,242.50 in total. The difference between the two rates is small, so don't be surprised if your paystub barely changes in July.
Quick comparison on a $55,000 salary
|
Resident |
Non-resident, all work taxable |
| Philadelphia wage tax |
$2,054.25 |
$1,883.75 |
| Pennsylvania income tax (3.07%) |
$1,688.50 |
$1,688.50 |
| Local EIT where you live |
None |
Depends on your municipality |
Non-residents who live elsewhere in Pennsylvania may also owe their home municipality's earned income tax, so their total local tax can end up close to a resident's.