Calculate Philadelphia wage tax at 3.75% (resident) or 3.44% (non-resident) rates. See combined city, PA state, and federal tax burden on earned income.
How Philadelphia Wage Tax Works
The Philadelphia Wage Tax is one of the oldest and broadest city income taxes in the United States. Unlike most income taxes, it applies to ALL earned income from the very first dollar โ there is no standard deduction, no personal exemption, and no threshold. Every dollar of earned income is subject to the tax.
The tax is withheld by employers for Philadelphia employees and must be paid quarterly by self-employed individuals and those whose employers do not withhold. Pennsylvania state income tax is a flat 3.07% on all taxable income.
The Formula
Philadelphia Wage Tax = (wages + SE_income) ร 3.75% (resident) or 3.44% (non-resident)
Credit for taxes paid elsewhere = min(other_state_tax, philly_wage_tax)
Net Philadelphia Wage Tax = Philadelphia Wage Tax - credit
PA State Tax = total_income ร 3.07%
Federal Tax = progressive brackets after standard deduction
Total Burden = net_philly_tax + PA_state + federal
Example
Single Philadelphia resident, $85,000 wages:
Philadelphia Wage Tax: $85,000 ร 3.75% = $3,188
PA State Tax: $85,000 ร 3.07% = $2,610
Federal Tax: ($85,000 - $16,100 std) ร brackets = approx. $12,386
Total: $18,184 (21.4% effective rate)
Frequently Asked Questions
Who must pay the Philadelphia Wage Tax?
The Philadelphia Wage Tax applies to: (1) all Philadelphia residents who earn wages, salaries, commissions, tips, bonuses, or net self-employment income โ regardless of where the work is performed, and (2) non-residents who work physically within Philadelphia city limits. It is one of the broadest city income taxes in the United States, with virtually no exemptions or deductions from the tax base.
What are the 2026 Philadelphia Wage Tax rates?
For 2026, the resident rate is 3.75% and the non-resident (commuter) rate is 3.44%. These rates apply to all earned income including wages, salaries, commissions, tips, bonuses, and net profits from self-employment. Note that passive income such as dividends, interest, and rental income is NOT subject to wage tax โ it is covered by the Net Profits Tax instead.
Can I get a refund or credit on my Philadelphia Wage Tax?
Philadelphia residents who pay income tax to another state or locality on the same income may claim a Wage Tax credit on their Philadelphia wage tax return. The credit reduces Philadelphia wage tax by the amount paid elsewhere, preventing full double taxation. Non-residents who worked remotely from outside Philadelphia on days where employer required remote work may also be eligible for a partial refund.
Is self-employment income subject to Philadelphia Wage Tax?
Yes, for Philadelphia residents. Net profits from self-employment (Schedule C income) earned by Philadelphia residents are subject to the resident wage tax rate of 3.75%. This is reported on the Net Profits Tax return rather than the wage tax return, but the economic effect is the same. Non-residents pay the non-resident rate on Philadelphia-sourced self-employment income.
How does Philadelphia Wage Tax compare to other major city taxes?
Philadelphia has one of the highest city income/wage tax rates among US cities. NYC tops out at 3.876% for high earners. Detroit charges 2.4% for residents and 1.2% for non-residents. Portland, Oregon has added the SHS (1%) and Preschool for All (up to 1.5%) taxes, but these only apply above income thresholds. Philadelphia is unique in having no threshold โ all earned income is taxed from dollar one.