Philadelphia Business Taxes for New Owners: BIRT, Net Profits Tax, Wage Tax and U&O

If you just formed a business inside Philadelphia, the city's tax obligations are separate from Pennsylvania's state taxes, and new owners often miss them. The city Department of Revenue collects its own business and payroll taxes through the Philadelphia Tax Center. This guide walks through the taxes you are most likely to face: the Business Income and Receipts Tax (BIRT), the Net Profits Tax, the Wage Tax and the Use and Occupancy Tax (U&O).

Informational only: This article is not legal or tax advice. Rates and deadlines change. The figures below reflect what was verified in October 2026. Talk with a CPA or tax attorney before you file, especially if you have multiple owners, an S corporation election or employees who live outside Philadelphia.

Materials and Information You Need Before You Start

• Your entity type and formation document. An LLC uses its Certificate of Organization (Form DSCB:15-8821). A corporation uses its Articles of Incorporation.
• Your exact business name and its record on the Department of State search at file.dos.pa.gov/search/business.
• A federal Employer Identification Number (EIN) from the IRS.
• A Philadelphia street address for your business, plus a Pennsylvania registered office with a street and number. A post office box alone is not accepted.
• Your estimated gross receipts and net income for the year, or last year's figures if you have them.
• Payroll records for any employees, including where each one lives.
• A myPATH account for state tax registration.
• A separate business bank account and a bookkeeping system that tracks income and expenses by month.

Step 1: Confirm Which Taxes Apply to Your Entity Type

Your legal structure decides which city and state taxes you owe. Sole proprietorships, partnerships and LLCs that are taxed as pass-through entities pay the Philadelphia Net Profits Tax and pass their income to the owners for Pennsylvania purposes. Pass-through income is subject to the state Personal Income Tax at a flat 3.07 percent. Corporations do not pay the Net Profits Tax. They pay BIRT and the state Corporate Net Income Tax, which is 7.49 percent for tax years beginning in 2026.

Every business in the city files BIRT, regardless of entity type. Your entity type decides whether you also file the Net Profits Tax return.

Step 2: Register With the State First

Philadelphia's accounts depend on your state registration, so handle the state side first. Pennsylvania does not have a general state business license, and it has no county business licenses. Whether your activity needs a separate license depends on what you do, so check city requirements for your industry.

If you sell taxable goods or services, register for a sales tax license through myPATH at pa.gov/services/revenue/register-my-business-for-taxes. The state sales tax rate is 6 percent. The PA-100 form was retired in 2022, so do not look for it. Registration now happens on myPATH.

Pennsylvania also does not use registered agents. Every filing business must list a registered office with a street and number. If you have no Pennsylvania address, you may contract with a Commercial Registered Office Provider (CROP) and list its name and county of venue. Listing a CROP without a contract can carry civil and criminal penalties.

Step 3: Open Your Philadelphia Tax Center Account

Set up your account on the Philadelphia Tax Center, reached from phila.gov. This single account is where you file BIRT, the Net Profits Tax, the Wage Tax and U&O, and where you make payments. Register for each tax that applies to you. Registering for a tax you don't owe creates confusion later, so confirm each one with the Department of Revenue if you are unsure.

Step 4: Understand and File the BIRT

BIRT has two parts. The gross receipts portion is charged in mills, where 1.410 mills equals $1.41 for every $1,000 of gross receipts. The net income portion is a percentage of taxable net income. The current rates for the most recent verified tax years are below.

Tax year	Gross receipts rate	Net income rate	Filing status
TY2024	1.415 mills	5.81%	Prior year, for reference
TY2025	1.410 mills	5.71%	Due April 15, 2026
TY2026	Not yet posted	Not yet posted	Check the phila.gov BIRT page

There is no $100,000 exemption starting with TY2025. That means every business files a BIRT return, even if it had no profit or no revenue. The city has said it plans to keep reducing BIRT rates, with the gross receipts portion phasing out over time. Because the TY2026 rates are not yet posted, check the phila.gov BIRT page for the current year before you calculate anything.

Step 5: Withhold the Wage Tax if You Have Employees

If you pay employees who work in Philadelphia, you withhold the Wage Tax from their pay and remit it to the city. Employers withhold the tax, not the employee directly. Rates effective July 1, 2026 are 3.735 percent for Philadelphia residents and 3.425 percent for nonresidents. The rates effective July 1, 2025 were 3.74 percent and 3.43 percent. The city has scheduled further reductions, so confirm the rate in effect for each pay period.

Step 6: File the Net Profits Tax

The Net Profits Tax applies to sole proprietors, partnerships and LLCs, not corporations. For TY2025, the rate was 3.74 percent for residents and 3.43 percent for nonresidents. The annual return and any balance due are due April 15. Estimated payments for the current tax year are due April 15 and June 15. Confirm the schedule for the tax year you are filing.

Three rules catch new owners off guard:

• File even with a loss. A return is required when the business shows no profit.
• Claim the BIRT credit. You receive partial credit against the Net Profits Tax for the BIRT net income portion you paid. Confirm the calculation with your CPA or the Department of Revenue.
• Calculate from net profit, not cash. Start from your business's profit or loss as reported on your federal return.

Step 7: Check Whether the Use and Occupancy Tax Applies

The Use and Occupancy Tax applies to non-residential space that you occupy in Philadelphia. If you lease an office, a retail storefront or a warehouse in the city, check whether the tax applies to your space and how it is filed. The current rate and filing details are not listed in this guide, so confirm both with the Department of Revenue before you sign a lease or open for business.

Step 8: Review the Other Local Taxes That May Apply

• School Income Tax: This applies to unearned income of Philadelphia residents. Confirm the rate and whether it reaches your business income with the Department of Revenue.
• Sweetened beverage tax: Distributors and retailers of sweetened beverages must comply. Confirm the rate and filing requirements before you sell.
• City hotel tax: If you rent short-term lodging, the city hotel tax is 8.5 percent. Confirm your registration requirements with the city.

Philadelphia sits outside the county earned income tax and local services tax framework under Act 511 and Act 32. You will not deal with a county tax collector for those taxes. The city Department of Revenue collects the taxes listed in this guide.

Step 9: File on Time and Ask About Extensions

Mark the BIRT and Net Profits Tax deadlines on your calendar as soon as you register. Ask the Department of Revenue about the BIRT extension process, including whether a filing extension changes the payment deadline. Those rules can differ by filing type, so confirm them directly rather than assuming. Extensions are only useful if you request them before the deadline passes.

Common Mistakes to Avoid

• Assuming a business with no profit does not need to file BIRT. Starting with TY2025, there is no $100,000 exemption, so you file.
• Using last year's Wage Tax rate after July 1, 2026.
• Skipping the Net Profits Tax return because the business had a loss.
• Missing the April 15 and June 15 estimated payment dates for the Net Profits Tax.
• Using a post office box as your Pennsylvania registered office.
• Searching for a state or county general business license that does not exist for most businesses.
• Relying on the PA-100 form, which was retired in 2022.

Tips for a Smoother First Year

• Track gross receipts monthly, not just at tax time. BIRT depends on them.
• Keep payroll records that show each employee's city residency. Wage Tax rates differ for residents and nonresidents.
• Set aside money each quarter for the Net Profits Tax estimated payments.
• Check phila.gov each January for updated rates before you file.
• Ask a CPA to review your first BIRT and Net Profits Tax return, especially if you have an S corporation election or an LLC with several members.

What to Expect After You Register and File

Once your state registration and Philadelphia Tax Center accounts are active, you should be able to file each return on schedule and track your balances in one place. Filing LLC formation paperwork with the Bureau of Corporations and Charitable Organizations typically takes about 15 business days to process, so plan your Philadelphia registration around that timeline. Filing on time and keeping clean records can help you avoid penalties, but confirm the penalty amounts with the Department of Revenue because they are not listed in this guide.

For state registration questions, the Pennsylvania Department of Revenue is at pa.gov/agencies/revenue. The Department of State business services are at file.dos.pa.gov. If you need free help with planning, the Pennsylvania Small Business Development Centers are at pasbdc.org.

Reminder: This guide is informational and is not legal or tax advice. Confirm current Philadelphia rates and deadlines on phila.gov and with a qualified CPA or attorney before you file.