{"id":105211,"date":"2026-02-04T20:01:14","date_gmt":"2026-02-04T20:01:14","guid":{"rendered":"https:\/\/www.newsbeep.com\/us-pa\/105211\/"},"modified":"2026-02-04T20:01:14","modified_gmt":"2026-02-04T20:01:14","slug":"philadelphia-businesses-owe-more-on-new-city-taxes","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us-pa\/105211\/","title":{"rendered":"Philadelphia businesses owe more on new city taxes"},"content":{"rendered":"

What is BIRT and who has to pay it?<\/p>\n

All for-profit commercial, limited liability, corporations, partnerships and individual owners doing business in Philadelphia must pay BIRT, which is a 5.71% tax on net income and a 1.410 mill rate, or $1.40 per $1,000, on gross receipts.\n<\/p>\n

Philadelphia collected more than $700 million in revenue from BIRT in fiscal year 2025, according to city data<\/a>. The money goes into the city\u2019s General Fund, which supports city departments and services.\n<\/p>\n

Previously, all businesses were exempted from paying BIRT on the first $100,000 of gross revenue. All companies and operations could benefit from the tax break, but Fegely said it was especially helpful for small businesses that were just getting started or had smaller annual revenues.\n<\/p>\n

However, ZOLL Medical Corporation, a company based in Massachusetts that makes medical devices and software, sued Philadelphia in 2024, claiming that the tax break violated Pennsylvania\u2019s Uniformity Clause, which requires that taxes be applied at a flat rate<\/a> among all \u201csubjects\u201d in the same class.\n <\/p>\n

Philadelphia City Council and Mayor Cherelle Parker eliminated the BIRT exemption in 2025 in reaction to the legal challenge.\n<\/p>\n

\u201cIt wasn\u2019t anyone\u2019s desire,\u201d Fegely said, \u201cbut it was a very well-thought-through situation and decision, a tough and difficult decision that was made with all of the information around.\u201d\n<\/p>\n

Impact on small businesses<\/p>\n

The end of the exemption and the associated additional tax burden could spell problems for Philadelphia\u2019s business community, Conviser said.\n<\/p>\n

\u201cIt did feel like an enormous rug pull,\u201d she said. \u201cLike, what if you\u2019ve got this tiny small business and you\u2019re actually doing everything legally and then you get penalized for it? That\u2019s not how I want things to be.\u201d\n<\/p>\n

Still, her business does well and she has a husband with a stable job, which she said is enough to support them and their two children. But Conviser knows other therapists and business owners are in more vulnerable financial positions.\n<\/p>\n

\u201cThe amount that goes out in taxes and then overhead, it\u2019s harder to make a living,\u201d she said. \u201cIt\u2019s not enough to just be good at your job. It\u2019s just hard.\u201d\n<\/p>\n

Professional organizations like the Greater Philadelphia Hispanic Chamber of Commerce have been trying to raise awareness about the tax changes since the fall with workshops and webinars.\n<\/p>\n

Year over year, businesses surveyed by the Diverse Chamber Coalition of Philadelphia, a collective of different chambers, called BIRT \u201cthe most burdensome tax they are subjected to,\u201d said Jennifer Rodr\u00edguez, president and CEO of the Hispanic Chamber.\n<\/p>\n

\u201cAnecdotally, what we have seen from business owners is frustration,\u201d she said. \u201cBecause the exemption elimination is effective now, they will have to pay full BIRT as of this year. They have not planned ahead for it.\u201d\n<\/p>\n

There are efforts in city council to provide some relief. Councilmember Michael Driscoll, who represents District 6, introduced a bill in November that would establish new BIRT exemptions for sole proprietors and single-member limited liability companies, or LLCs.\n<\/p>\n

The proposal has been reviewed by the city\u2019s Law Department \u201cand is designed to fully comply with state law,\u201d Driscoll told WHYY in an email.\n<\/p>\n

\u201cWhen the long-standing BIRT exemption ended, thousands of these businesses received a tax bill for the first time. For a small business trying to survive on tight margins, this tax can be the difference between staying open or closing its doors,\u201d he said. \u201cMy bill offers targeted relief for sole proprietors and single-member LLCs to help them stay open, reinvest, and grow.\u201d\n<\/p>\n

If passed, the legislation would take effect on July 1 and apply to next year\u2019s tax season.\n<\/p>\n

Support and resources for Philly businesses<\/p>\n

City leaders are encouraging businesses to apply for the Philadelphia Free Business Tax Preparation Program<\/a>. Fegely said it can help small businesses filing BIRT for the first time and their other local, state and federal taxes.\n<\/p>\n

The program matches vetted local accounting firms with businesses making less than $250,000 a year in revenue.\n<\/p>\n

\u201cWe want to make sure we\u2019re helping the people who are going to get hit hardest,\u201d said Liam Kelly Fleming, senior director of Small Business Assistance Programs at the Department of Commerce.\n<\/p>\n

The accounting firms all have physical locations in Philadelphia and are up to date on local tax codes.\n<\/p>\n

\u201cThey are small business owners themselves, so they understand the small business owners\u2019 sort of plight, or challenges and rewards,\u201d Fleming said. \u201cA lot of them really have a passion for education.\u201d\n<\/p>\n

The program has received 678 applications as of Feb. 2, and 535 businesses have so far been approved and matched to accountants.\n<\/p>\n

Businesses that did not have to pay BIRT in the last three years will be treated as new businesses this filing season, which is a significant distinction, Fegely said.\n<\/p>\n

BIRT taxes businesses on their projected revenues and incomes for the upcoming year. Businesses new to BIRT will only be taxed on their 2025 earnings for filings due this April. Next year, the businesses will file taxes based on their 2026 earnings and can pay their BIRT liabilities on their projected 2027 earnings in quarterly installments throughout that year.\n<\/p>\n

It prevents businesses from having to pay two year\u2019s worth of BIRT payments at once, Fegely said.\n<\/p>\n

To compensate for the loss of the BIRT exemption, City Council passed $38.5 million in last year\u2019s budget to fund the free tax preparation program and bolster existing financial support programs for Philadelphia businesses.\n<\/p>\n

The additional money is being used to award more grants, loans and initiatives for local businesses of all sizes.\n <\/p>\n","protected":false},"excerpt":{"rendered":"What is BIRT and who has to pay it? All for-profit commercial, limited liability, corporations, partnerships and individual…\n","protected":false},"author":2,"featured_media":31966,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[69,71,70,12516,5800],"class_list":["post-105211","post","type-post","status-publish","format-standard","has-post-thumbnail","category-philadelphia","tag-philadelphia","tag-philadelphia-headlines","tag-philadelphia-news","tag-small-businesses","tag-taxes"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/posts\/105211","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/comments?post=105211"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/posts\/105211\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/media\/31966"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/media?parent=105211"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/categories?post=105211"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/tags?post=105211"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}