Philadelphia business owners and residents, take note: important tax changes are on the horizon for 2025. Updates to the City of Philadelphia’s Business Income and Receipts Tax (BIRT), Net Profits Tax, Wage Tax, and School Income Tax could affect your bottom line, especially if you’re not prepared.
The most significant update for 2025 is the elimination of the $100,000 BIRT gross receipts exemption, meaning more businesses will now be required to file and pay. Combined with modest rate reductions across several taxes, these changes highlight the need for proactive tax planning. Read on for a full breakdown of Philadelphia’s 2025 tax updates and what they mean for your business or personal finances.
The Business Income and Receipts Tax (BIRT) is a tax applied to both the net income and gross receipts generated by business activities conducted within the City of Philadelphia. The biggest change for tax year 2025 is the elimination of the exemption for the first $100,000 of gross receipts. The gross receipts tax rate has been decreased from 1.415 mills to 1.410 mills. The net income portion of the BIRT has been reduced from 5.81% to 5.71%.
BIRT filings and payments are due by April 15 each year, covering business activity from the previous calendar year. If you were not previously required to file due to the $100,000 exemption, you will need to set up a Philadelphia tax account to file for the 2025 tax year.
The Net Profits Tax is imposed on the net profits of a business conducted by a Philadelphia resident, and on non-residents who conduct business in the City. The tax rates for 2025 are reduced from 3.75% to 3.74% for residents and from 3.44% to 3.43% for nonresidents.
Starting July 1, 2025, Philadelphia’s Wage and Earnings Tax rate will be reduced from 3.75% to 3.74% for residents, and from 3.44% to 3.43% for non-residents. Any paycheck issued with a pay date after June 30, 2025, must have Philadelphia’s wage tax withheld at the updated rates for both residents and non-residents.
School Income Tax applies to many types of unearned income received by Philadelphia residents. The tax rate for 2025 is reduced from 3.75% to 3.74%.
Philadelphia’s tax landscape continues to evolve, and with changes to BIRT filing requirements and wage tax rates, now is the time to review your tax strategy.
Whether you’re a new business now required to file due to the removed BIRT exemption or a seasoned taxpayer navigating updated rates, it’s critical to stay compliant and informed. Don’t leave your tax planning to chance—partner with Alloy Silverstein’s experienced accountants and advisors to ensure you’re maximizing deductions, minimizing liabilities, and staying ahead of local compliance requirements.
Schedule your personalized tax consultation today and gain peace of mind for the year ahead.
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