{"id":209394,"date":"2026-06-03T10:58:08","date_gmt":"2026-06-03T10:58:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/us-pa\/209394\/"},"modified":"2026-06-03T10:58:08","modified_gmt":"2026-06-03T10:58:08","slug":"philadelphias-birt-change-hits-small-businesses-hard","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us-pa\/209394\/","title":{"rendered":"Philadelphia\u2019s BIRT change hits small businesses hard"},"content":{"rendered":"

This is a guest post by Samantha Wittchen<\/a>, cofounder at Circular Philadelphia<\/a>, an organization aiming to build a regenerative local economy.<\/p>\n

Tax day was coming, and I knew I was going to owe more this year than in previous years \u2014 but it wasn\u2019t because I made any more money.<\/p>\n

Thanks to a 2024 court challenge to the City of Philadelphia\u2019s $100,000 exemption that protected an estimated 122,000 independent contractors and small businesses<\/a> from paying the Business Income and Receipts Tax (known as the BIRT<\/a>) each year, the Parker administration, with the support of City Council, eliminated the exemption for tax year 2025.\u00a0<\/p>\n

The tax was originally designed for big corporations, and the exemption was a band-aid to shield independent business owners like me from a tax that wasn\u2019t meant for them. In 2025, that band-aid was ripped off.<\/p>\n

That left many independent business owners \u2014 from electricians to hair stylists, writers to food truck vendors, mental health professionals to photographers \u2014 wondering just how much more their tax bill would be come April 15. Many Philadelphians now subject to the BIRT weren\u2019t even aware that the exemption had been eliminated until they received a nasty tax bill from their accountant.<\/p>\n

As it turned out, my city tax bill was a couple thousand dollars more than the previous year, and compared with stories I\u2019ve heard from others, I had it easy. One Philadelphia therapist owed over $5,700 <\/a>this year, and another reported a jump of $8,000<\/a>.<\/p>\n

Don\u2019t punish the people building here<\/p>\n

As a Kensington resident with two small businesses, freelance income, and a rental property in West Philly, I\u2019m no stranger to Philadelphia\u2019s arcane tax structure.<\/p>\n

Through my work building Philadelphia\u2019s circular economy<\/a>, I\u2019ve talked with countless independent contractors and small business owners about how burdensome it can be to operate here.\u00a0<\/p>\n

Some have chosen to establish their businesses outside city limits just to avoid the headache. I don\u2019t blame them.<\/p>\n

Unfortunately, as long as I want to enjoy living in the best city on the East Coast (Go Birds!), I can\u2019t avoid the tax consequences of my multi-hyphenate work life.<\/p>\n

That\u2019s why the Parker administration and City Council\u2019s decision to eliminate the BIRT exemption without meaningful relief for small operators stung so much.<\/p>\n

Entrepreneurs, independent contractors, sole proprietors and small business owners are already navigating a tax system that pushes many people to look outside the city.<\/p>\n

It feels like a big middle finger to the very people who, despite all the challenges, have chosen to live, work, build businesses, and contribute to Philadelphia\u2019s tax base.<\/p>\n

It\u2019s particularly galling to someone like me who actively encourages entrepreneurs to set up businesses in Philadelphia to help build the ecosystem we need to keep resources in use. Many of the businesses that underpin the circular economy are small operators. They\u2019re the owners of repair shops, refillery and secondhand stores \u2014 the very mom-and-pop businesses that the elimination of the BIRT exemption disproportionately impacts.<\/p>\n

How City Council can still act<\/p>\n

Although the elimination of the exemption took many taxpayers by surprise this April, some councilmembers foresaw its adverse effects last year.\u00a0<\/p>\n

Councilmember Mike Driscoll introduced Bill 251026<\/a> in November 2025 to recognize the class of sole proprietorships operated by individuals or single-member LLCs as exempt from the BIRT. While the bill would not protect all small businesses, particularly those that operate as partnerships or multi-member LLCs, it would help many freelancers, independent contractors, and sole proprietors who have been negatively impacted by the loss of the exemption.\u00a0<\/p>\n

Council President Kenyatta Johnson has not yet given that bill a hearing and a vote, but it has been discussed<\/a> during the current 2027 City Council budget hearings thanks to the work of the LIFT Philly<\/a> coalition, which is working to get the bill, dubbed the LIFT Act, passed. Just this week, the LIFT Philly coalition released a video<\/a> of Councilmembers Driscoll and Thomas pledging to pass a bill this fall that provides relief to Philadelphia small businesses.<\/p>\n

The LIFT Philly website has helpful tools<\/a> to call on City Council to pass tax relief. With next year\u2019s city budget hanging in the balance, now is the time to let your councilmembers know that you want them to pass the LIFT Act.\u00a0<\/p>\n

Why Philly must fix the BIRT now<\/p>\n

The consequences of not fixing this tax problem impact the tech ecosystem, the trades, the arts community, healthcare, educators and so many more. Both residential and commercial rents may rise this year as landlords try to recoup their increased tax costs.\u00a0<\/p>\n

I suspect most Philadelphians have a neighbor who has been impacted by this issue. I wonder how long it\u2019ll take before those neighbors move to other neighborhoods, ones outside the city where they can continue to operate without fear of having to shutter their business due to the tax burden.<\/p>\n

It\u2019s no secret that the City of Philadelphia needs the help of its 122,000 small businesses<\/a> to continue to innovate, contribute to Philly\u2019s vibrancy, and yes, generate tax revenue. But the answer isn\u2019t to disproportionately burden those business owners with a tax that wasn\u2019t meant for them in the first place.<\/p>\n

While the damage from last year\u2019s decision is already done for the city\u2019s small businesses, City Council and Mayor Parker have an opportunity to correct the problem with this year\u2019s budget by passing the LIFT Act and signing it into law.\u00a0<\/p>\n

Let\u2019s hope they do. Otherwise, they may learn the hard way just how much those small businesses and independent contractors contributed to the city\u2019s economy when the exodus begins.<\/p>\n

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