The Philadelphia Tax Reform Commission (TRC) was established to tackle the city’s longstanding economic challenges by reimagining its tax structure, and for over two decades, it has shaped Philadelphia’s economic future.

Convened by Philadelphia City Council and in collaboration with the Mayor’s Office, the TRC unites policy experts, business leaders, and community stakeholders to develop data-driven strategies that remove structural tax barriers hindering economic mobility. The TRC’s focus on job creation, business growth, and poverty reduction aims to modernize the tax code, stimulate private investment, and strengthen the city’s economic foundation for a more prosperous Philadelphia.

The TRC has completed its “Interim Report” outlining key tax reform recommendations, officially announced during a press conference on February 25, 2025, marking a significant step to address Philadelphia’s long-standing economic challenges.

Key Takeaways: The TRC’s proposed reforms could create between 31,200 and 93,200 new jobs over the next five years; double the skills and salaries of 15,000 Philadelphians; accelerate the success of over 1,000 small, diverse businesses; and attract hundreds of new businesses to our city.

Recommendations include:

Eliminate the BIRT Tax Burden

  • Goal: Completely phase out the BIRT over 8–12 years, beginning with the elimination of the net income portion (currently at 5.81%).
  • Implementation: The Commission recommends prioritizing the elimination of the net income portion of the Business Income and Receipts Tax (BIRT) first, followed by a gradual reduction of the gross receipts portion. Throughout this process, it is essential  that the Net Profits Tax (NPT) remains aligned to prevent the creation of tax loopholes.
  • Impact: Philadelphia is the only city in the region imposing this dual tax structure, pushing businesses to relocate to suburbs or other metropolitan areas with lower tax burdens.

Reduce the Wage Tax to 3% or Less

  • Current Rates: 3.75% for residents and 3.44% for non-residents—among the highest in the country.
  • Implementation: Enact gradual reductions, aiming to reach or fall below 3%, with the possibility to accelerate reductions based on revenue growth and pension fund improvements.
  • Impact: Lower wage taxes will retain workers, reduce reverse commuting to the suburbs, and improve Philadelphia’s competitiveness.

Maintain Commitment to Steady Tax Reductions

  • Goal: Establish a predictable and stable tax policy that enables businesses to confidently plan long-term investments while maintaining the flexibility to adapt to exceptional economic shifts or unforeseen crises.
  • Impact: This will foster a stable economic environment that supports sustained growth and resilience.

Strategic Investment for Growth: The Jumpstart Fund

  • Goal: Allocate 10% of savings from BIRT reductions into a new fund designed to boost economic development.
  • Key Initiatives:
    • Workforce Development: Double the skills and earnings of 15,000 Philadelphians through targeted training programs.
    • Small Business Growth: Provide capital and resources to help 1,000 diverse small businesses scale and create jobs.
    • Business Attraction: Use incentives to recruit new businesses to Philadelphia, fostering job growth and expanding the tax base.
  • Impact: The creation of this fund will increase economic opportunity for Philadelphians.

Additional Legislative Priorities:

  • Raise the Minimum Wage to $15/Hour: Advocate for state legislation to raise Philadelphia’s minimum wage, ensuring wage growth aligns with the cost of living.
  • Preserve the Sterling Act: Oppose changes that would redirect wage tax revenue to suburban municipalities, which could undermine city services.
  • Adopt Market-Based Sourcing: Push for state approval to implement market-based sourcing for service taxes, modernizing the city’s tax code to better reflect economic realities.
  • Enhance Small Business Support: Maintain the $100,000 BIRT exemption for small businesses, simplify tax filing, and offer more flexibility with quarterly BIRT payments.
  • Expand Tax Relief Program Enrollment: Increase accessibility to tax relief by exploring auto-enrollment and cross-program coordination for eligible residents.
  • Wage Tax Refund: Streamline the wage tax refund process for low-income residents by aligning it with state tax forgiveness programs and expanding eligibility.
  • Office of the Tax Advocate: Create a dedicated office to help taxpayers navigate Philadelphia’s complex tax system and improve access to tax relief programs.
  • Federal and State Benefits: Strengthen outreach to help eligible Philadelphians claim an estimated $450 million in unclaimed federal and state benefits.
  • Business Tax Payments: Allow all businesses to pay estimated BIRT taxes quarterly, improving cash flow flexibility.
  • Tax Communication for Businesses: Enhance outreach and clarity around business tax obligations to improve compliance and reduce confusion.
  • Parking Use & Occupancy: Adjust parking taxes to ease the burden on hospitality businesses while balancing revenue through increased on-street parking fees.
  • Property Assessments: Support the Assessment Equity Task Force in ensuring fair and transparent property assessments citywide.
  • Tax Abatement for Building Conversions: Offer a 20-year tax abatement to incentivize converting underused commercial properties and revitalize vacant spaces.
  • Better Tax Administration: Invest in technology upgrades to streamline tax processes and improve administrative efficiency.
  • Tax Incentive Effectiveness: Reinstate annual evaluations of city tax incentives to assess their impact and ensure return on investment.

The Chamber of Commerce for Greater Philadelphia is committed to advocating for tax reforms that will strengthen our city’s economy and create meaningful opportunities for all Philadelphians. We recognize the importance of the Tax Reform Commission’s work in laying a foundation for transformative change – reforms that not only address the structural barriers hindering economic growth but also create pathways for job creation, business expansion, and poverty reduction. While the “Interim Report” provides a promising start, we know the Commission’s work is far from complete, and the Chamber will continue to engage in the process.

As we look ahead to Philadelphia’s once-in-a-generation economic opportunities – such as the 250th anniversary of the Declaration of Independence and the 2026 FIFA World Cup – the stakes have never been higher.

We must ensure our tax policies position Philadelphia to compete regionally and nationally, attract new businesses, retain talent, and foster inclusive economic growth.

The Chamber will continue to work alongside city leaders, the business community, and diverse stakeholders to advocate for reforms that go beyond incremental change – pushing for bold action that allows every Philadelphian to thrive. Together, we can ensure that Philadelphia not only competes but leads in creating a more prosperous and equitable future.