Jun 27, 2022 - News

What Philly's wage tax cut means for your wallet

Illustration of a dollar sign with an arrow for a middle bar over a grid.
Illustration: Brendan Lynch/Axios

Philadelphia officials approved cuts to the city's wage tax along with the new city budget last week, but workers won't likely see a big boost in their paychecks.

What to expect: Philly households making the city's median income, which is below $50,000 a year, will see less than $30 added to their take-home pay annually due to the small wage tax cuts, according to the city.

  • A household earning $50,000 would save nearly $25 in wage taxes compared to the old rate, while residents earning $100,000 would pocket $49.80 in savings.

Context: City legislators and Mayor Jim Kenney hashed out a budget deal that led to last week's passage of the $5.8 billion budget for the upcoming fiscal year, which begins July 1.

  • In addition to the wage tax relief, officials also slightly reduced the business income and receipts tax, or BIRT, to its lowest level in more than five decades.

Of note: The wage tax is the largest revenue generator in the city.

Between the lines: How much the business-friendly and wage tax cuts will cost Philly remains unknown.

  • The city has yet to calculate how much the tax cuts will cost the city in revenue, Kevin Lessard, a spokesperson for the Kenney administration, told Axios last week.
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