Quick Answer
Philadelphia wage tax is 3.8398% for residents and 3.4481% for non-residents in 2026. A resident earning $60,000 pays about $2,304 annually in city wage tax, or roughly $89 per biweekly paycheck.
Best Answer
Sarah Chen, Payroll Tax Analyst
Anyone who works in Philadelphia and needs to understand how wage tax affects their paycheck
How much does Philadelphia wage tax cost?
Philadelphia wage tax is one of the highest local income taxes in the US, with different rates for residents and non-residents. For 2026, residents pay 3.8398% while non-residents pay 3.4481%. Unlike most cities, Philly's wage tax applies to your gross wages before most deductions.
The tax is automatically withheld from your paycheck if you work in Philadelphia, regardless of where you live.
Example: $60,000 salary with Philly wage tax
Philadelphia resident:
Non-resident (lives in suburbs):
Savings for non-residents: $235 per year ($9 per paycheck)
Philadelphia wage tax rates comparison
Key differences from other city taxes
What gets taxed vs. what doesn't
Taxable:
Not taxable:
Special situations
Work from home: If you're a Philly resident working remotely for a non-Philly employer, you still owe resident wage tax on that income.
Multiple work locations: If you work both inside and outside Philadelphia, only income earned within city limits is subject to the tax.
Seasonal workers: Students and seasonal workers may qualify for exemptions under certain conditions.
What you should do
Use our paycheck calculator to see how Philadelphia wage tax affects your specific take-home pay. The calculator shows the combined impact of federal, state, and local taxes so you can budget accurately.
If you're considering moving to the suburbs, factor in the wage tax savings (about $235 annually per $60,000 of income) against increased commuting costs.
Key takeaway: Philadelphia wage tax costs residents 3.84% of gross income and non-residents 3.45%, making it one of the most expensive local taxes in the US at roughly $2,300 annually for a $60,000 salary.
*Sources: [Philadelphia Department of Revenue](https://www.phila.gov/departments/department-of-revenue/), [IRS Publication 15](https://www.irs.gov/pub/irs-pdf/p15.pdf)*
Key Takeaway: Philadelphia wage tax costs residents 3.84% and non-residents 3.45% of gross income, making it one of the highest local tax rates in the US.
Philadelphia wage tax rates and annual cost by salary level
| Annual Salary | Resident Tax (3.8398%) | Non-Resident Tax (3.4481%) | Annual Difference |
|---|---|---|---|
| $40,000 | $1,536 | $1,379 | $157 |
| $60,000 | $2,304 | $2,069 | $235 |
| $80,000 | $3,072 | $2,758 | $314 |
| $100,000 | $3,840 | $3,448 | $392 |
More Perspectives
Sarah Chen, Payroll Tax Analyst
New Philadelphia area residents trying to understand the tax implications of living in vs. outside the city
Moving to/from Philadelphia: Wage tax considerations
The decision to live in Philadelphia versus the suburbs has significant tax implications due to the city's high wage tax rates. Many people are surprised by the immediate paycheck impact when they start working in the city.
Resident vs. non-resident: The $235 question
For every $60,000 you earn, living outside Philadelphia saves you about $235 per year in wage tax (3.8398% vs. 3.4481%). However, this comes with tradeoffs:
Living in Philadelphia (resident):
Living in suburbs (non-resident):
Real-world calculation: Break-even analysis
Annual wage tax difference on $75,000 salary:
Typical suburban commuting costs:
Result: The wage tax savings are quickly erased by commuting expenses for most suburban residents.
What newcomers should know
Key takeaway: While non-residents save about $300 annually on wage tax, commuting costs typically exceed this savings by $3,000-5,000 per year.
Key Takeaway: Non-residents save about $300 annually on Philadelphia wage tax, but commuting costs typically exceed this savings.
Sources
- Philadelphia Department of Revenue — Official Philadelphia wage tax rates and regulations
- IRS Publication 15 — Employer's Tax Guide for withholding requirements
Related Questions
Reviewed by Sarah Chen, Payroll Tax Analyst on February 28, 2026
This content is for educational purposes only and is not a substitute for professional tax advice. Consult a qualified tax professional for advice specific to your situation.