The current Philadelphia Sales Tax Rate is 8.00 percent. The sales and use tax is imposed on the retail sale, consumption of tangible personal property, and certain services in Pennsylvania.
Additional Sales Tax
By law, sales from eating establishments in Allegheny County and Philadelphia County are subject to an additional sales tax rate of 1 percent and 2 percent, respectively. Pennsylvania has an origin-based sales tax, meaning the tax is based on the location of the seller.
Pennsylvania state taxes include income taxes, real and personal property taxes, an inheritance tax, a gas tax, and an estate tax. The state charges a flat income tax rate of 3.07 percent. However, Pennsylvania does not charge a state property tax, which is instead levied at the municipal level.
Historical Context
In 1939, Philadelphia became the first city to implement a wage tax, which has undergone various changes over time. For instance, in 1985, the wage tax reached 4.96 percent but was first reduced in 1995 to improve competitiveness, with small reductions continuing thereafter.
Sales Tax Rates
The Philadelphia, Pennsylvania, general sales tax rate is 6%. The total combined sales tax rate for Philadelphia can vary between 6% and 8% depending on the zipcode. This 8% rate consists of 6% state sales tax and 2% Philadelphia County sales tax.
The average combined rate for all zip codes in Philadelphia is 7.955%. The last update to these rates was made in January 2023.
Philadelphia County collects a 2% local sales tax, which is the maximum allowed under Pennsylvania law.
Wage Tax and Other Local Taxes
Residents of Philadelphia pay a flat city income tax of 3.93% on earned income. Nonresidents who work in Philadelphia pay a local income tax of 3.50%. The Philadelphia income tax is due on April 15th. The local income tax paid by residents is 0.43% higher than the tax paid by nonresidents. Small reductions in local wage tax for 2023 include a decrease from 3.79% to 3.75% for residents.