Philadelphia has made key changes to its tax policies. For example, businesses that previously weren’t required to file and pay certain taxes will now be required to do so. Here are two important changes you should know:
- The $100,000 Business Income and Receipt Tax (BIRT) exemption won’t be available in 2026 when you file your 2025 taxes.
- The annual $2,000 Use and Occupancy Tax (U&O) exemption ends January 1, 2026.
What this means for you
The annual U&O exemption will no longer be available to taxpayers using or occupying Philly properties for business purposes. The U&O tax is due on the 25th of every month, although some taxpayers may qualify to file and pay the entire year in one payment. Now’s the time to start planning for this change. The exemption won’t be available after December 2025. The first payment without the exemption is due January 25, 2026.
Tax Year 2024 is the last year to use the $100,000 BIRT exemption. It isn’t available for the 2025 tax year. From now on, businesses that were previously exempt will have to file and pay the BIRT.
Although many businesses will have to file and pay BIRT for the first time in 2026 (for their 2025 taxes), don’t forget that you can take a credit against the Net Profits Tax (NPT) of 60% what you paid on the net income portion of BIRT. Although your BIRT bill may increase, your NPT bill will then decline. Talk to a tax professional who’s familiar with local tax rules.
Get your business ready
Since 2015, Philadelphia businesses with taxable gross receipts under $100,000 didn’t have to file and pay the BIRT. But now the City must end this exemption due to a legal challenge.
We’re working hard to ensure you’re ready for 2026 when every business in Philadelphia must file a BIRT return and pay any liabilities owed.
Philadelphia aims to foster innovation and entrepreneurship. It has set aside important resources to help businesses navigate the upcoming change. Join us for a series of information sessions to learn how and where to access these resources.
We’ve got three in-person events coming up. They’re your opportunity to:
- Learn more about upcoming changes to the City’s tax structure,
- Get ready for Tax Year 2026 (when you have to file returns for 2025),
- Find out how you can get free tax preparation and financial support,
- Learn where to get personalized help with all your Philly business needs, and
- Ask us questions!
Registration required
The events are scheduled for July 24 and 29, at 5 p.m. ET, and on August 7, at 12 p.m. ET. It’s free to attend, but you have to register. You can find all the details, including where and how to register in this blog post. We hope you will attend and help spread the word about the events among your networks.
Use your business losses to your advantage
Philadelphia lets you deduct net operating losses from future profits. A “loss carry forward” smooths out your income and losses over time. You can carry forward losses incurred in 2022 and after for 20 years. If you haven’t filed returns in the past, or filed No Tax Liability forms, you will need to update or file past returns to document the loss. Consult with a tax professional about amending past returns.
