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Amending Chapter 19-1500 of The Philadelphia Code, entitled “Wage and Net Profits Tax,” and Chapter 19-2800, entitled “Pennsylvania Intergovernmental Cooperation Authority Tax on Wages and Net Profits,” to expand eligibility for wage tax and net profits tax relief; to further reduce wage and net profits tax rates for low-income non-residents; and to provide for grants to low-income City residents in an amount equivalent to the PICA portion of wage and net profits taxes paid; all under certain terms and conditions.
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THE COUNCIL OF THE CITY OF PHILADELPHIA HEREBY ORDAINS:
SECTION 1. Title 19 of The Philadelphia Code is hereby amended to read as follows:
TITLE 19. FINANCE, TAXES AND COLLECTIONS
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CHAPTER 19-1500. WAGE AND NET PROFITS TAX
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§ 19-1501. Definitions.
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(4) Low Income Non-Residents. Non-Residents who are either: (a) in the class of individuals entitled to refund and/or forgiveness of taxes pursuant to State Low-Income Tax Provisions, including those who are eligible for the maximum refund and/or forgiveness available and those who are entitled to less than the maximum percentage [amount.] amount; or (b) in the class of individuals who would qualify for real estate tax relief under a program established under the Affordable Housing Tax Exemption Act, Act of July 11, 2022 P.L.703, No. 58, 72 P.S. § 4728.102, et seq. (i.e., an individual whose income does not exceed the maximum annual income allowable for an eligible claimant to participate in the Pharmaceutical Assistance Contract for the Elderly Needs Enhancement Tier (PACENET)).
(5) Low Income Residents. Residents who are either: (a) in the class of individuals entitled to refund and/or forgiveness of taxes pursuant to State Low-Income Tax Provisions, including those who are eligible for the maximum refund and/or forgiveness available and those who are entitled to less than the maximum percentage [amount.] amount; or (b) in the class of individuals who would qualify for real estate tax relief under a program established under the Affordable Housing Tax Exemption Act, Act of July 11, 2022 P.L.703, No. 58, 72 P.S. § 4728.102, et seq. (i.e., an individual whose income does not exceed the maximum annual income allowable for an eligible claimant to participate in the Pharmaceutical Assistance Contract for the Elderly Needs Enhancement Tier (PACENET)).
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§ 19-1508. Refunds and Forgiveness for Poverty Income.
(1) Low Income Residents.
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(b) Beginning January 1, 2020, the rate of tax imposed on Low Income Residents under subsection 19-1502(1)(a) (tax on salaries, wages, etc.) shall be as follows:
(.1) From January 1, 2020, through June 30, 2020: 1.8712%.
(.2) For the fiscal year July 1, 2020, through June 30, 2021, and thereafter: zero.
(c) Beginning January 1, 2020, and thereafter, the rate of tax imposed on Low Income Residents under subsection 19-1502(2)(a) (tax on net profits) shall be [as follows:] zero.
[(.1) For the calendar year January 1, 2020, through December 31, 2020, and thereafter: zero.]
(2) Low Income Non-Residents.
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(b) Beginning January 1, 2020, the rate of tax imposed on Low Income Non-Residents under subsection 19-1502(1)(b) (tax on salaries, wages, etc.) shall be as follows:
(.1) From January 1, 2020, through June 30, 2020: 2.9481%.
(.2) For the fiscal year July 1, 2020, through June 30, 2021, and thereafter: one and one half percent (1.5%); provided that, [this rate shall be reduced to zero when the tax imposed pursuant to Chapter 19-2800 ("Pennsylvania Intergovernmental Cooperation Authority Tax on Wages and Net Profits") expires.] upon certification by the Director of Finance to the Chief Clerk of Council that the grants addressed in Section 19-2803(1)(a) have been made available, the rate shall be zero.
(c) Beginning January 1, 2020, the rate of tax imposed on Low Income Non-Residents under subsection 19-1502(2)(b) (tax on net profits) shall be as follows:
(.1) For the calendar year January 1, 2020, through December 31, 2020, and thereafter: one and one half percent (1.5%); provided that, [this rate shall be reduced to zero when the tax imposed pursuant to Chapter 19-2800 ("Pennsylvania Intergovernmental Cooperation Authority Tax on Wages and Net Profits") expires.] upon certification by the Director of Finance to the Chief Clerk of Council that the grants addressed in Section
19-2803(1)(b) have been made available, the rate shall be zero.
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§ 19-1510. Implementation.
(1) Enrollment and Outreach. The Department is authorized to automatically enroll individuals for wage and net profits tax refunds. The Department shall take all measures deemed necessary to reduce and simplify application processing requirements in providing refunds and shall make appropriate outreach efforts to improve awareness among individuals qualified to receive refunds.
(2) Reporting. On September 1 of each year, the Department of Revenue shall provide a report to the Chief Clerk of Council setting forth, for the preceding 12 months: the number of individuals receiving wage and net profits tax refunds; the average amount of such refunds; the total amount refunded; an estimate of the total number of additional taxpayers eligible for refunds who have not applied.
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CHAPTER 19-2800. PENNSYLVANIA INTERGOVERNMENTAL
COOPERATION AUTHORITY TAX ON WAGES AND NET PROFITS
§ 19-2803. Imposition of Pennsylvania Intergovernmental Cooperation Authority
Tax on Wages and Net Profits.
(1) An annual tax to provide revenues for the purposes of the Pennsylvania Intergovernmental Cooperation Authority is imposed as follows:
(a) On salaries, wages, commissions, and other compensation earned by residents of Philadelphia on and after July 1, 1991 at the rate of one and one-half percent (1.5%).
(.1) Low-income Residents, as defined in Section 19-1501(5), shall be eligible to receive a grant from the City equal to all amounts paid to the City pursuant to this Section upon establishment by the Director of Finance of a program to do so.
(b) On the net profits earned in business, professions or other activities conducted by residents after July 1, 1991 at the rate of one and one-half percent (1.5%).
(.1) Low-income Residents, as defined in Section 19-1501(5), shall be eligible to receive a grant from the City equal to all amounts paid to the City pursuant to this Section upon establishment by the Director of Finance of a program to do so.
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SECTION 2. This ordinance is effective January 1, 2026.
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Explanation:
[Brackets] indicate matter deleted.
Italics indicate new matter added.
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