Residents of Philadelphia pay a flat city income tax of 3.93% on earned income, in addition to the Pennsylvania income tax and the Federal income tax. Nonresidents who work in Philadelphia pay a local income tax of 3.50%. The Philadelphia income tax is due on April 15th. Many tax preparers will file your Philadelphia income tax return for free.
Tax Reciprocity Between PA and NJ
PA and NJ have reciprocity. Your Phila city wage tax will not be creditable against PA state tax. People who live in the city must always pay the 3.8712% resident wage tax. If someone works in Philadelphia, they must pay the local tax rate of 3.47%, no matter what.
New Jersey residents can claim a credit for the Philadelphia wage tax.
Earnings Tax and Wage Tax Rates
The Earnings Tax rate for residents is decreasing to 3.8398%. The rate for non-residents is 3.4481%. All Philadelphia residents owe the City Wage Tax, regardless of where they work. Non-residents who work in Philadelphia must also pay the Wage Tax. Local income taxes generally apply to people who live or work in the locality.