Philadelphia Local Tax Guide (2026)
Understanding how local taxes work in Philadelphia, Pennsylvania, and how they affect your take-home pay.
Last updated: September 2, 2026
- •Philadelphia has a local wage tax that applies to wages and salaries earned in the city.
- •Residents pay 3.87% on all wages. Non-residents pay 3.45% on Philadelphia wages only.
- •Local tax is separate from Pennsylvania state tax and federal tax. Both are calculated independently and add to your total tax burden.
- •Local tax directly reduces your take-home pay. Combined with state and federal taxes, the total tax burden can be significant for high earners.
What local taxes apply in Philadelphia
Philadelphia has a local wage tax that applies to wages and salaries earned in the city.
Key Takeaway
| Residency Status | Rate | Applies To |
|---|---|---|
| Resident | 3.87% | All wages |
| Non-resident | 3.45% | Philadelphia wages only |
Philadelphia has a local wage tax that applies to wages and salaries earned in the city. The rate depends on whether you're a resident or non-resident.
Philadelphia has a city wage tax that applies to all wages, salaries, and other compensation earned in the city. Unlike income tax, the wage tax applies to gross wages before deductions.
Residents: If you live in Philadelphia, you pay 3.87% on all your wages, regardless of where you work.
Non-residents: If you work in Philadelphia but live elsewhere, you pay 3.45% on wages earned in the city.
The wage tax is different from income tax—it applies to wages and salaries, not investment income or other sources of income.
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How they interact with state taxes
Philadelphia local tax is calculated separately from Pennsylvania state income tax. Both taxes are calculated on your taxable income and are withheld by your employer.
Tax Deduction
Philadelphia local tax is calculated separately from Pennsylvania state income tax. This means:
- Local tax is in addition to state tax, not instead of it
- Both taxes are calculated on your taxable income (or wages, depending on the tax type)
- Your employer withholds both local and state taxes from your paycheck
- You may be able to deduct local tax on your state tax return, depending on Pennsylvania tax rules
For example, if you earn $100,000 in Philadelphia, you pay Pennsylvania state tax on that income, plus Philadelphia local tax. The local tax doesn't reduce your state taxable income.
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Who is affected
You're subject to Philadelphia local tax if you live in the city or work in the city, depending on whether you're a resident or non-resident.
You're subject to Philadelphia wage tax if:
- You live in Philadelphia (residents pay on all wages)
- You work in Philadelphia but live elsewhere (non-residents pay on Philadelphia wages only)
- You're self-employed and perform work in Philadelphia
The tax applies to wages, salaries, commissions, bonuses, and other compensation. It does not apply to investment income, retirement distributions, or Social Security benefits.
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Common paycheck misconceptions
Common misunderstandings about Philadelphia local tax, including when it applies and how it's calculated.
Common misconceptions about Philadelphia wage tax:
- "It's the same as income tax": False. Wage tax applies to wages only, not all income sources.
- "I can avoid it by working remotely": If you're a Philadelphia resident, you pay on all wages regardless of work location. Non-residents only pay on Philadelphia-sourced wages.
- "It's deducted automatically": Your employer should withhold it, but verify your pay stub to ensure it's being deducted correctly.
Take-home pay impact
Philadelphia local tax directly reduces your take-home pay. The amount depends on your income level and whether you're a resident or non-resident.
Philadelphia wage tax has a significant impact on take-home pay. For example, if you earn $100,000 as a Philadelphia resident:
- Wage tax: $3871 annually
- This reduces your bi-weekly paycheck by about $149
- Combined with Pennsylvania state tax (flat 3.07%) and federal tax, the total tax burden is substantial
To see exactly how Philadelphia local tax affects your paycheck, use our calculator above. You can adjust your income, filing status, and deductions to see how different scenarios affect your net pay.
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Does this apply to you?
Determine whether you're subject to Philadelphia local tax based on where you live and work.
Check Your Pay Stub
You're subject to Philadelphia local tax if:
- You live in Philadelphia (residents pay on all wages)
- You work in Philadelphia but live elsewhere (non-residents pay on Philadelphia wages only)
You're not subject to Philadelphia local tax if you live and work outside the city, even if you're a Pennsylvania resident.