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July 6, 2020
2020-1701

Philadelphia nonresident Wage Tax increases effective July 1, 2020

The City of Philadelphia announced that effective July 1, 2020, the Wage Tax rate for nonresidents is 3.5019%, an increase from the previous rate of 3.4481%. The rate for residents remains unchanged at 3.8712%. (News release, City of Philadelphia, June 30, 2020.)

Similarly, the Philadelphia nonresident Earnings Tax and Net Profits Tax (NPT) also increase effective July 1, 2020 to 3.5019%, with the resident rate remaining at 3.8712%. The Earnings Tax closely resembles the Wage Tax with the primary difference being how the taxes are collected. Employers withhold the Wage Tax from employees' wages and remit it to the city. If the employer doesn't withhold and remit the Wage Tax for an employee, the employee is responsible for paying the Earnings Tax directly to the city.

Employers must act quickly

This nonresident rate increase has an immediate impact on all businesses that operate in the city and have workers who live outside of Philadelphia. All wages paid to nonresidents with a pay date after June 30, 2020, must reflect the new rate.

More information about the Philadelphia Wage Tax is available here.

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Contact Information
For additional information concerning this Alert, please contact:
 
Workforce Tax Services - Employment Tax Advisory Services
   • Kenneth Hausser (kenneth.hausser@ey.com)
   • Debera Salam (debera.salam@ey.com)
   • Kristie Lowery (kristie.lowery@ey.com)
   • Peter Berard (peter.berard@ey.com)

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