Philadelphia Business Tax Changes: What Business Owners Really Need to Know
In the last few months, I have been asked on many occasions about the changes in Philadelphia Business taxes and what business owners should know. Note that this change is driven by a legal challenge and the City position that the previous position breaks uniformity (exemptions are no longer legal) . This should be a 2-3 minutes summary of a much longer presentation for different organizations.
- Elimination of the $100,000 BIRT Threshold (Effective 2025)
Starting with the 2025 tax year, the longstanding $100,000 BIRT exemption will be eliminated.
What this means:
- Businesses with gross receipts below $100,000 that were previously exempt may now have a filing obligation. Every business in the City will have to file now.
- Many small or early-stage businesses will need to revisit compliance—even if the actual tax due remains minimal.
Action item:
If your business was previously exempt due to the threshold, now is the time to confirm filing requirements and avoid penalties.
- Use & Occupancy Tax: $2,000 Exemption Removed (Effective 2026)
Beginning in 2026, the $2,000 Use & Occupancy Tax exemption will be eliminated.
What this means:
- Commercial tenants previously under the exemption may now owe tax.
- Businesses leasing office, retail, or industrial space should factor this into future cash flow planning.
Action item:
Review lease terms and confirm who bears responsibility for Use & Occupancy Tax payments (usually the tenant which might be subject to a bigger payment).
- Minor Adjustments to BIRT and NPT/Wage Tax Rates
There are also very small reductions to:
- BIRT rates
- Net Profits Tax (NPT)
- Wage Tax
More Than Taxes: City Initiatives Worth Watching
Beyond tax rates, the City of Philadelphia has also introduced initiatives focused on:
- Reducing or eliminating certain business licensing requirements
- Streamlining regulatory processes for entrepreneurs and small businesses
- Encouraging business formation and retention within the city through existing programs and the Jumpstart initiatives
Link – Philadelphia Flyer on Business changes
At GG CPA Services, we continuously monitor Philadelphia tax policy so our clients can focus on running and growing their businesses—not decoding legislation.
If you have questions about how these changes apply to your situation, or if you are unsure whether new filing obligations apply to you, we’re here to help.
