Beginning with tax year 2025, all businesses operating in Philadelphia will be required to pay the Business Income and Receipts Tax (BIRT). With regards to the , the City makes a distinction between income earned in Philadelphia and outside of Philadelphia.
The City also makes a distinction between sales and services.*
Sales that are delivered to a location outside of Philadelphia are not subject to BIRT. This includes sales delivered electronically.
Example #1: Artist living in Philadelphia sells a painting to a collector who lives in New Jersey: NOT TAXABLE
Example #2: Graphic designer living in Philadelphia sells digital graphic design to a business located in NJ: NOT TAXABLE
Example #3: Artist living in Philadelphia is commissioned by a Philadelphia-based business to create a sculpture installed at one of their satellite locations in the Philly suburbs: NOT TAXABLE
Services are subject to BIRT unless they are physically performed outside of Philadelphia.
Example #1: Tax preparer living in Philadelphia prepares taxes for a client living in New Jersey: TAXABLE
Example #2: Musician living in Philadelphia plays a concert in the Philly suburbs: NOT TAXABLE
Example #3: Artist living in Philadelphia travels to NJ to teach a workshop: NOT TAXABLE
Example #4: Artist living in Philadelphia is hired by a school in NJ to teach an online workshop which they teach from their home: TAXABLE
As you review your 1099 and cash income for the past year, please note the amount of income that was from sales delivered to or services performed in a location outside of Philadelphia and provide that information to me at our meeting. We will be able to exclude income that from the BIRT.
*Real estate rental income from properties outside of Philly is excluded from the BIRT.