We're still working on this page's design and content. The new Wage Tax rate for residents of Philadelphia is 3.8809% (.038809). But don’t expect big savings — for someone with a $50,000 salary, the reductions planned for fiscal year 2020 would mean about $5 … Who has to pay it? Since New Philadelphia is a mandatory filing city, the employees in the Income Tax Office review all city income tax returns for residents and businesses. At its height, the Philadelphia Wage Tax reached 4.96% in 1985. The Pennsylvania Intergovernmental Cooperation Authority (PICA), established in 1991 to help the city recover from a financial crisis, operates by collecting a 1.5 percent wage tax that is part of the city’s overall rate. The tax was made possible by the Sterling Act, a Depression-era state law that allowed the city to earn revenue by passing special taxes. The state’s uniformity clause is often cited as a roadblock to tax reform in Philadelphia, especially when comparing its tax structure with other big cities. For the mandated remote working time in March, employees will need to submit a Philadelphia Wage Tax Refund Petition next year in 2021. The new wage tax rate for non-residents of Philadelphia, who are subject to the Philadelphia city wage tax, is 3.5019% (.035019). If you live in Philadelphia, your employer should automatically be deducting the Wage Tax from your paycheck regardless of where you work. Philadelphia business owners and those that withhold taxes on employees that live in Philadelphia should take notice that the City of Philadelphia has reduced the City Wage Tax rate effective July 1, 2015. On the other hand, if a Philadelphia employer requires a non-resident to perform duties outside the city, he or she is exempt from the Wage Tax for the days spent fulfilling that work. Wage Tax – even with his or her employer’s authorization. The tax applies to payments that a person receives from an employer in return for work or services. 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