If you're running a business in the City of Brotherly Love, it's time to mark your calendar for the upcoming tax changes. Philadelphia is extending its tax embrace to all businesses starting next year, introducing a mandate for all to file a Business Income and Receipts Tax (BIRT) return in 2026. But there's a silver lining for small enterprises, according to a report by the City of Philadelphia's government website.
For those local businesses that have flown under the tax radar with Philadelphia sales below $100,000 for the past three years, breathing a sigh of relief is in order – they're exempt from making estimated tax payments upon filing their initial return next year. This isn't just pulling a rabbit out of a hat; it extends a policy for "new businesses" that's been in place since 2018. In essence, if you haven't filed a BIRT return since at least 2022, the city's got your back, letting you pay only for your 2025 Philadelphia business activity and put off those estimated payments until the following fiscal year.
When the page of the calendar turns to 2027, and it's time to file your next return, things get a bit more structured. Business owners will have the choice to settle their second-year estimated tax in quarterly bites or in one full gulp. And when April 2028 rolls around, a full estimated tax payment based on the previous year's dues for your 2027 business hustle will be expected. It's like a tax version of the circle of life, where 2027's returns become the base for 2028's estimated payments.
So, if your business's presence in Philly has been more of a gentle whisper than a shout, remember you're not obligated to make an estimated payment when you first file taxes in 2026. This bit of bureaucratic benevolence means you can focus on settling up for just your 2025 business dealings. From there, the city will provide the option of how you handle your estimated taxes for the following year, either spreading it out over time or taking care of it, in one fell swoop.
