Tax Credits for Philadelphia Residents

The Federal Earned Income Tax Credit (EITC)

The City of Philadelphia wants every qualifying Philadelphian to receive the federal Earned Income Tax Credit (EITC). This federal credit is for low-to-moderate-income individuals and families. They can claim the credit when filing a federal tax return and receive a credit of up to $6,935. Despite its availability, thousands of hard-working eligible Philadelphians are not claiming the EITC credit, which can provide a needed financial boost to individuals, families, and the local economy.

The City provides a notice that explains how employees can claim EITC and requires employers to give workers this notice while providing them with W-2, 1099, or comparable forms. You can do this electronically or give them a printed copy. The notice is available for download at www.phila.gov/revenue/eitc.

The City of Philadelphia Income-based Wage Tax Refund Program

The City also reduces the rate on Wage and Net Profit Taxes to 1.5% for taxpayers who are eligible for Pennsylvania Special Tax Forgiveness. Eligible employees must complete the Pennsylvania Special Tax Forgiveness schedule (“Schedule SP”) when submitting their Pennsylvania Personal Income Tax return. After filing the PA Income Tax return, eligible Philadelphia taxpayers may request a refund from the Philadelphia Department of Revenue bysubmitting an Income-based Wage Tax Refund Petition.

Employers may not reduce their employees’ Wage Tax withholding. Eligible employees who file a petition can receive a refund of Wage Tax paid in excessof 1.5% for the 2022 tax year.

Paper versions of the 2022 Income-based Wage Tax petitions will soon be available for download on our website at www.phila.gov/revenue/wage-tax-petition or eligible employees can complete a 2022 Income-based Wage Tax petition electronically

For questions, please email revenue@phila.gov or contact your accounting professional.

Source: City of Philadelphia