CHAPTER 19-1500. WAGE AND NET PROFITS TAX 298

 

Notes

298	Renumbered, 1994 Ordinances, p. 1028.

§ 19-1501. Definitions.

   (1)   Business. An enterprise, activity, profession or undertaking of any nature conducted for profit or ordinarily conducted for profit, whether by an individual, co-partnership, association, governmental 299 body or unit or agency, or any other entity.

   (2)   Employee. Any person who renders services to another for a consideration or its equivalent, under an express or implied contract, and who is under the control and direction of the latter, including temporary, provisional, casual or part-time employment.

   (3)   Employer. An individual, co-partnership, association, corporation, governmental body or unit or agency, or any other entity, who or that employs one or more persons on a salary, wage, commission or other compensation basis.

   (4)   Low Income Non-Residents.  300 Non-Residents who are 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.

   (5)   Low Income Residents.  301 Residents who are 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.

   (6)   Net Profits. 302 The net gain from the operation of a business, profession or enterprise, after provision for all allowable costs and expenses incurred in the conduct thereof, either paid or accrued in accordance with the accounting system used, without deduction of taxes based on income.

   (7)   Non-resident. 303 An individual, co-partnership, association, corporation or any other entity domiciled outside the City.

   (8)   Person. 304 Every individual, co-partnership, fiduciary or association.

   (9)   Resident. 305 An individual, co-partnership, association, corporation or any other entity domiciled in the City.

   (10)   Salaries, Wages, Commissions and Other Compensation. 306 All salaries, wages, commissions, bonuses, incentive payments, fees and tips that may accrue or be received by an individual, whether indirectly or through an agent and whether in cash or in property, for services rendered, but excluding:

      (a)   periodical payments for sick or disability benefits and those commonly recognized as old age benefits;

      (b)   retirement pay, or pensions paid to persons retired from service after reaching a specific age or after a stated period of employment;

      (c)   any wages or compensation paid to any person for active service in the Army, Navy or Air Force of the United States, or to a member of the National Guard for active federal duty; 307

      (d)   any bonus or additional compensation paid by the United States, this Commonwealth, or any other state for such service;

      (e)   any statutory per diem compensation paid any witness or juror, or member of the District Election Board; 308

      (f)   Stock options which do not have a readily ascertainable fair market value, as defined by 26 C.F.R. § 1.83-7(b), on the date the stock option is granted. Stock options which do have a readily ascertainable fair market value on the date the stock option is granted shall be considered as compensation in the amount of such value and received on such date. If an employee is offered the choice of receiving compensation in cash or compensation in stock options, and chooses stock options, then such stock options shall be deemed to have a readily ascertainable fair market value equal to the amount of cash that was offered. Any amount that would otherwise be considered as compensation arising from the exercise, exchange, sale or disposition of stock options, whether or not they had a readily 309 ascertainable fair market value when granted, shall not be taxable under this Chapter; 310

      (g)   Certain tuition benefits, as follows: 311

         (.1)   Qualified tuition reduction benefits.

         (.2)   Tuition benefits that:

            (.a)   Are provided to its employees by a not-for-profit healthcare system and its not-for-profit affiliates that are wholly (one hundred percent (100%)) owned and controlled, directly or indirectly, by a not-for- profit university; and

            (.b)   Would qualify as qualified tuition reduction benefits if such not-for-profit healthcare system and its not-for-profit affiliates were part of such university.

         (.3)   Reimbursements by an employer of an employee's educational expenses relating to education required by the employer to maintain the employee's employment status or compensation level, including any education required by the Commonwealth to retain a professional license or certification relating to the employee's position. The employer must certify any such requirement in such manner as the Department shall determine.

         (.4)   For purposes of this subsection (g), the following definition applies:

            (.a)   Qualified tuition reduction benefits. As defined in Section 117(d) of the Internal Revenue Code (26 U.S.C. § 117(d)), as amended from time to time.

   (11)   State Low-Income Tax Provisions. The state law provisions for refund and forgiveness of Commonwealth taxes based on poverty income set forth in Section 304 of the Tax Reform Code of 1971 (Act of March 4, 1971, P.L. 6, No. 2), as added by the Act of March 13, 1974 (P.L. 179, No. 32), 72 P.S. § 7304, and as amended from time to time. 312

   (12)   Reserved. 313

   (13)   Reserved. 314

 

Notes

299	Enrolled bill read "governmenal".
300	Added, Bill No. 040397 (became law June 10, 2004); deleted, Bill No. 080161 (approved May 22, 2008); added, Bill No. 140140 (approved June 17, 2014).
301	Added, Bill No. 040397 (became law June 10, 2004); deleted, Bill No. 080161 (approved May 22, 2008); added, Bill No. 140140 (approved June 17, 2014).
302	Renumbered, Bill No. 040397 (became law June 10, 2004).
303	Renumbered, Bill No. 040397 (became law June 10, 2004).
304	Renumbered, Bill No. 040397 (became law June 10, 2004).
305	Renumbered, Bill No. 040397 (became law June 10, 2004).
306	Renumbered, Bill No. 040397 (became law June 10, 2004).
307	Amended, Bill No. 050741 (approved December 15, 2005).
308	Added, 1975 Ordinances, p. 1318; amended, 1980 Ordinances, p. 932; amended, 1981 Ordinances, p. 269.
309	Enrolled Bill No. 000354 read "really".
310	Added, Bill No. 000354 (approved September 14, 2000). Section 2 of Bill No. 000354 provides: "The provisions of subsection 19-1501(8)(f) of The Philadelphia Code, as added by Section 1 of this Ordinance, exempting certain stock options from tax, shall apply only to stock options that are granted after the date this Ordinance takes effect, and to stock options that are exercised, exchanged, sold or otherwise disposed of, on or after the date this Ordinance takes effect."
311	Added, Bill No. 060766 (approved January 23, 2007).
312	Added, Bill No. 040397 (became law June 10, 2004); deleted, Bill No. 080161 (approved May 22, 2008); added, Bill No. 140140 (approved June 17, 2014).
313	Added, Bill No. 040397 (became law June 10, 2004); deleted, Bill No. 080161 (approved May 22, 2008).
314	Added, Bill No. 040397 (became law June 10, 2004); deleted, Bill No. 080161 (approved May 22, 2008).

§ 19-1502. Imposition of Tax. 315

   (1)   Tax on Salaries, Wages, Commissions and Other Compensation.

      (a)   Residents.  316 An annual tax on salaries, wages, commissions and other compensation earned by residents of Philadelphia is imposed for general revenue purposes for the following periods at the following rates:

January 1, 1950 through December 31, 1956	1.2500%
January 1, 1957 through December 31, 1960	1.5000%
January 1, 1961 through December 31, 1965	1.6250%
January 1, 1966 through June 30, 1968	2.0000%
July 1, 1969 through June 30, 1971	3.0000%
July 1, 1971 through June 30, 1976	3.3125%
July 1, 1976 through June 30, 1983	4.3125%
July 1, 1983 through June 30, 1991	4.9600%
July 1, 1991 through December 31, 1995	3.4600%
January 1, 1996 through June 30, 1996	3.3600%
July 1, 1996 through June 30, 1997	3.3400%
July 1, 1997 through June 30, 1998	3.2900%
July 1, 1998 through June 30, 1999	3.1869%
July 1, 1999 through June 30, 2000	3.1135%
July 1, 2000 through June 30, 2001	3.0635%
July 1, 2001 through June 30, 2002	3.0385%
July 1, 2002 through June 30, 2003	3.0000%
July 1, 2003 through December 31, 2004	2.9625%
January 1, 2005 through December 31, 2005	2.8310%
January 1, 2006 through December 31, 2006	2.8010%
January 1, 2007 through December 31, 2007	2.7600%
January 1, 2008 through June 30, 2008	2.7190%
July 1, 2008 through December 31, 2008	2.4800%
January 1, 2009 through June 30, 2009	2.4300%
July 1, 2009 through June 30, 2010	2.4296%
July 1, 2010 through June 30, 2013	2.4280%
July 1, 2013 through June 30, 2014	2.4240%
July 1, 2014 through June 30, 2015	2.4200%
July 1, 2015 through June 30, 2016	2.4102%
July 1, 2016 through June 30, 2017	2.4004%
July 1, 2017 through June 30, 2018	2.3907%
July 1, 2018 through June 30, 2019	2.3809%
July 1, 2019 through June 30, 2021	2.3712%
July 1, 2021 through June 30, 2022	2.3398%
July 1, 2022 through June 30, 2023	2.2900%
July 1, 2023, and thereafter	2.2500%

 

      (b)   Non-Residents.  317 An annual tax on salaries, wages, commissions and other compensation earned by non-residents of Philadelphia for work done or services performed or rendered in Philadelphia is imposed for general revenue purposes for the following periods at the following rates:

January 1, 1950 through December 31, 1956	1.2500%
January 1, 1957 through December 31, 1960	1.5000%
January 1, 1961 through December 31, 1965	1.6250%
January 1, 1966 through June 30, 1968	2.0000%
July 1, 1969 through June 30, 1971	3.0000%
July 1, 1971 through June 30, 1976	3.3125%
July 1, 1976 through December 31, 1995	4.3125%
January 1, 1996 through June 30, 1996	4.2256%
July 1, 1996 through June 30, 1997	4.2082%
July 1, 1997 through June 30, 1998	4.1647%
July 1, 1998 through June 30, 1999	4.0750%
July 1, 1999 through June 30, 2000	4.0112%
July 1, 2000 through June 30, 2001	3.9672%
July 1, 2001 through June 30, 2002	3.9462%
July 1, 2002 through June 30, 2003	3.9127%
July 1, 2003 through December 31, 2004	3.8801%
January 1, 2005 through December 31, 2005	3.8197%
January 1, 2006 through December 31, 2006	3.7716%
January 1, 2007 through December 31, 2007	3.7557%
January 1, 2008 through June 30, 2008	3.7242%
July 1, 2008 through December 31, 2008	3.5392%
January 1, 2009 through June 30, 2009	3.5000%
July 1, 2009 through June 30, 2010	3.4997%
July 1, 2010 through June 30, 2013	3.4985%
July 1, 2013 through June 30, 2014	3.4950%
July 1, 2014 through June 30, 2015	3.4915%
July 1, 2015 through June 30, 2016	3.4828%
July 1, 2016 through June 30, 2017	3.4741%
July 1, 2017 through June 30, 2018	3.4654%
July 1, 2018 through June 30, 2019	3.4567%
July 1, 2019 through June 30, 2020	3.4481%
July 1, 2020 through June 30, 2021	3.5019%
July 1, 2021 through June 30, 2022	3.4481%
July 1, 2022, and thereafter	3.4400%

 

      (c)   The tax imposed under subsections 19-1502(1)(a) and (b) shall relate to and be imposed upon salaries, wages, commissions, and other compensation paid by an employer or on his behalf to any person who is employed by or renders services to him.

   (2)   Tax on Net Profits Earned in Businesses, Professions or Other Activities.

      (a)   Residents.  318 An annual tax on the net profits earned in businesses, professions or other activities conducted by residents of Philadelphia is imposed for general revenue purposes for the following periods at the following rates:

January 1, 1949 through December 31, 1955	1.2500%
January 1, 1956 through December 31, 1959	1.5000%
January 1, 1960 through December 31, 1964	1.6250%
January 1, 1965 through December 31, 1968	2.0000%
January 1, 1969 through December 30, 1970	3.0000%
January 1, 1971 through December 31, 1975	3.3125%
January 1, 1976 through December 31, 1982	4.3125%
January 1, 1983 through June 30, 1991	4.9600%
July 1, 1991 through December 31, 1995	3.4600%
January 1, 1996 through December 31, 1996	3.3400%
January 1, 1997 through December 31, 1997	3.2900%
January 1, 1998 through December 31, 1998	3.1869%
January 1, 1999 through December 31, 1999	3.1135%
January 1, 2000 through December 31, 2000	3.0635%
January 1, 2001 through December 31, 2001	3.0385%
January 1, 2002 through December 31, 2002	3.0000%
January 1, 2003 through December 31, 2004	2.9625%
January 1, 2005 through December 31, 2005	2.8310%
January 1, 2006 through December 31, 2006	2.8010%
January 1, 2007 through December 31, 2007	2.7600%
January 1, 2008 through June 30, 2008	2.7190%
July 1, 2008 through December 31, 2008	2.4800%
January 1, 2009 through December 31, 2009	2.4296%
January 1, 2010 through December 31, 2012	2.4280%
January 1, 2013 through December 31, 2013	2.4240%
January 1, 2014 through December 31, 2014	2.4200%
January 1, 2015 through December 31, 2015	2.4102%
January 1, 2016 through December 31, 2016	2.4004%
January 1, 2017 through December 31, 2017	2.3907%
January 1, 2018 through December 31, 2018	2.3809%
January 1, 2019 through December 31, 2020	2.3712%
January 1, 2021 through December 31, 2021	2.3398%
January 1, 2022 through December 31, 2022	2.2900%
January 1, 2023, and thereafter	2.2500%

 

      (b)   Non-Residents.  319 An annual tax on the net profits earned in businesses, professions or other activities conducted in Philadelphia by non-residents is imposed for general revenue purposes for the following periods at the following rates:

January 1, 1949 through December 31, 1955	1.2500%
January 1, 1956 through December 31, 1959	1.5000%
January 1, 1960 through December 31, 1964	1.6250%
January 1, 1965 through December 31, 1968	2.0000%
January 1, 1969 through December 30, 1970	3.0000%
January 1, 1971 through December 31, 1975	3.3125%
January 1, 1976 through December 31, 1982	4.3125%
January 1, 1983 through June 30, 1991	4.9600%
July 1, 1991 through December 31, 1995	4.3125%
January 1, 1996 through December 31, 1996	4.2082%
January 1, 1997 through December 31, 1997	4.1647%
January 1, 1998 through December 31, 1998	4.0750%
January 1, 1999 through December 31, 1999	4.0112%
January 1, 2000 through December 31, 2000	3.9672%
January 1, 2001 through December 31, 2001	3.9462%
January 1, 2002 through December 31, 2002	3.9127%
January 1, 2003 through December 31, 2004	3.8801%
January 1, 2005 through December 31, 2005	3.8197%
January 1, 2006 through December 31, 2006	3.7716%
January 1, 2007 through December 31, 2007	3.7557%
January 1, 2008 through June 30, 2008	3.7242%
July 1, 2008 through December 31, 2008	3.5392%
January 1, 2009 through December 31, 2009	3.4997%
January 1, 2010 through December 31, 2012	3.4985%
January 1, 2013 through December 31, 2013	3.4950%
January 1, 2014 through December 31, 2014	3.4915%
January 1, 2015 through December 31, 2015	3.4828%
January 1, 2016 through December 31, 2016	3.4741%
January 1, 2017 through December 31, 2017	3.4654%
January 1, 2018 through December 31, 2018	3.4567%
January 1, 2019 through December 31, 2019	3.4481%
January 1, 2020 through December 31, 2020	3.5019%
January 1, 2021 through December 31, 2021	3.4481%
January 1, 2022, and thereafter	3.4400%

 

      (c)   The tax levied under subsections 19-1502(2)(a) and (b) shall relate to and be imposed on the net profits of any business, profession, or enterprise carried on by any person as owner or proprietor, either individually or in association with some other person or persons.

      (d)   For taxable years beginning on or after January 1, 1998, the tax levied under subsections 19-1502(2)(a) and (b) shall not apply to any net profits earned by a domestic or foreign business trust, or any series thereof, that qualifies as a regulated investment company under Section 851 of the Internal Revenue Code and is registered with the United States Securities and Exchange Commission under the Investment Company Act of 1940, or any related domestic or foreign business trust, or any series thereof, which confines its activities in Philadelphia to the maintenance, administration and management of intangible investments and activities of regulated investment companies.

      (e)   For taxable years beginning on or after January 1, 2012, the tax levied under subsections 19-1502(2)(a) and (b) shall not apply to any net profits from any activity described in Section 19-2601 "Business", subsection (7) (relating to certain investment companies and investment company managers).  320

 

Notes

315	Amended, 1956 Ordinances, p. 881; amended, 1960 Ordinances, p. 880; amended, 1965 Ordinances, p. 1621; amended, 1968 Ordinances, p. 1553; amended, 1969 Ordinances, p. 1080; amended, 1971 Ordinances, p. 603. Former Section 19-1502 repealed and new Section added, Bill No. 020092 (approved April 23, 2002); amended, Bill No. 030073 (became law April 25, 2003); amended, subsection (3) repealed, Bill No. 040607 (approved July 1, 2004). Section 2 of Bill No. 040607 provides: "This Ordinance shall be effective as of January 1, 2004."
316	Amended, Bill No. 080161 (approved May 22, 2008); amended, Bill No. 080855 (approved December 8, 2008); amended, Bill No. 110138 (approved June 24, 2011); amended, Bill No. 130444 (approved June 25, 2013); amended, Bill No. 150167 (approved June 18, 2015); amended, Bill No. 160175 (approved June 20, 2016); amended, Bill No. 170198 (approved June 14, 2017); amended, Bill No. 180168 (approved June 20, 2018); amended, Bill No. 190155 (approved June 18, 2019); amended, Bill No. 210324 (approved June 28, 2021); amended, Bill No. 220410 (approved June 27, 2022); amended, Bill No. 230147 (approved June 23, 2023).
317	Amended, Bill No. 080161 (approved May 22, 2008); amended, Bill No. 080855 (approved December 8, 2008); amended, Bill No. 110138 (approved June 24, 2011); amended, Bill No. 130444 (approved June 25, 2013); amended, Bill No. 150167 (approved June 18, 2015); amended, Bill No. 160175 (approved June 20, 2016); amended, Bill No. 170198 (approved June 14, 2017); amended, Bill No. 180168 (approved June 20, 2018); amended, Bill No. 190155 (approved June 18, 2019); amended, Bill No. 200291 (approved June 26, 2020); amended, Bill No. 220410 (approved June 27, 2022).
318	Amended, Bill No. 080161 (approved May 22, 2008); amended, Bill No. 080855 (approved December 8, 2008); amended, Bill No. 110138 (approved June 24, 2011); amended, Bill No. 130444 (approved June 25, 2013); amended, Bill No. 150167 (approved June 18, 2015); amended, Bill No. 160175 (approved June 20, 2016); amended, Bill No. 170198 (approved June 14, 2017); amended, Bill No. 180168 (approved June 20, 2018); amended, Bill No. 190155 (approved June 18, 2019); amended, Bill No. 210324 (approved June 28, 2021); amended, Bill No. 220410 (approved June 27, 2022); amended, Bill No. 220659-A (approved November 9, 2022); amended, Bill No. 230147 (approved June 23, 2023).
319	Amended, Bill No. 080161 (approved May 22, 2008); amended, Bill No. 080855 (approved December 8, 2008); amended, Bill No. 110138 (approved June 24, 2011); amended, Bill No. 130444 (approved June 25, 2013); amended, Bill No. 150167 (approved June 18, 2015); amended, Bill No. 160175 (approved June 20, 2016); amended, Bill No. 170198 (approved June 14, 2017); amended, Bill No. 180168 (approved June 20, 2018); amended, Bill No. 190155 (approved June 18, 2019); amended, Bill No. 200291 (approved June 26, 2020); amended, Bill No. 220410 (approved June 27, 2022).
320	Added, Bill No. 120007 (approved April 10, 2012). Section 5 of Bill. No. 120007 provides: "Nothing in this Ordinance shall affect the amount of estimated business privilege tax payments required to be paid in April 2012 for estimated Tax Year 2012 tax liabilities, and such estimated tax payments shall be calculated as if this Ordinance were not in effect for Tax Year 2012."