Trust Magazine

Philadelphia’s Wage Tax Has Little Impact for Residents


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  • Winter 2024
  • 2023: Looking Back on a Year of Milestones
  • How States Manage Their Budgets
  • Indigenous Leaders Protects Canada's Boreal Forest
  • Evidence-Based Solutions Led to Milestones in 2023
  • The Beauty of Chilean Patagonia
  • Bridging Divides: A Call for Stronger Leadership
  • U.S. Women Make Gains in Highest-Paying Occupations
  • Utah Leads the Way on Wildlife Crossings
  • Philadelphia's Wage Tax Has Little Impact for Residents
  • America's New Tipping Culture
  • A Roadmap for Managing Wildfire Costs
  • Navigating the U.S. Political Landscape
  • 5 Facts About Hispanic Americans and Health Care
  • Debt Collection Cases Dominate Civil Dockets
  • The Human Impact of Solving Plastic Pollution
  • It's Time to Fix Housing in America
  • Return on Investment
  • The Growing Threat of Antibiotic-Resistant Bacteria
  • View All Other Issues
Philadelphia’s Wage Tax Has Little Impact for Residents

Philadelphia has made small annual reductions to its resident wage tax rate for some three decades, since its high of 4.96% in 1995. It resumed the cuts in 2023, reducing the wage tax rate from 3.79% to 3.75%. However, an analysis from Pew’s Philadelphia research and policy initiative shows that on a year-to-year basis, the cut had little impact on the overall local tax burdens of resident households, reducing them by less than one-tenth of a percentage point.

Pew’s report, “The Local Tax Burden on Philadelphia Households,” found that the overall local tax burden was lowest, in percentage terms, on homeowners who receive the city’s $80,000 homestead exemption and highest on low-income renters of market-rate apartments. “The latest tax cut was not enough to change the imbalance in tax burdens in just one year, with highest-income homeowners seeing a $75 reduction in taxes owed per year while the reduction dropped to $49 per year for the highest-income renters,” said Thomas Ginsberg of Pew’s Philadelphia research and policy initiative.

Pew’s model was based on 10 hypothetical representative households with varying levels of income, property values, and consumer purchases. The $80,000 homestead exemption is widely used by homeowners but is not available to renters or their landlords. The model assumes that renters shoulder the property tax as part of their rent, which is typically passed on from landlords who are ineligible for the homestead exemption. Pew’s model did not analyze nonresident taxes.

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The Local Tax Burden on Philadelphia Households

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Debates about Philadelphia’s future often center on the city’s tax system and two questions: Are the burdens it places on residents equitable, and are those on businesses counterproductive? To help inform the residential piece, The Pew Charitable Trusts examined the current system by calculating the percentage of total income Philadelphians pay in local taxes to the city and school district, depending on whether they own or rent their homes.

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