Philadelphia BIRT Cost Estimator
Estimates based on the City of Philadelphia Department of Revenue's published Business Income and Receipts Tax (BIRT) rates: tax year 2025 rates, 1.410 mills on gross receipts plus 5.71% on net income. Since tax year 2025 the old $100,000 exemption is gone, so the tax applies from the first dollar of Philadelphia receipts.
Estimates use the City of Philadelphia's published BIRT rates for tax year 2025 (1.410 mills on gross receipts, 5.71% on net income), the latest published rates. Tax year 2026 rates had not been published as of September 2026. The Commercial Activity License is free. We are not a government agency and are not liable for differences between these estimates and your final city tax bill. Fee schedules current as of September 2026.
Business Licenses and Taxes in Philadelphia: The Honest 2026 Guide
Philadelphia flips the usual script. The business license itself costs nothing: the Commercial Activity License (CAL) has been free since January 1, 2014, and it is a lifetime license. But the city's Business Income and Receipts Tax (BIRT) hits every dollar of Philadelphia gross receipts, because the old $100,000 exemption was eliminated starting with tax year 2025. So the real question is not "how much is the license" but "how much is the tax." That is what the calculator above answers.
What Philadelphia actually charges businesses
| Tax / license | Current rate | Who pays it |
|---|---|---|
| BIRT, gross receipts portion | 1.410 mills (0.141%, or $1.41 per $1,000) | Every business with Philadelphia gross receipts, from the first dollar |
| BIRT, net income portion | 5.71% of taxable net income | Same; losses carry forward, no tax on a loss year |
| Commercial Activity License | $0, free, lifetime | Required for any business operating in Philadelphia |
What that looks like in real numbers
- Consultant, $150,000 in receipts, $90,000 net income: $211.50 gross receipts tax + $5,139 net income tax = about $5,350.50 a year.
- Small shop, $80,000 in receipts, breaking even: $112.80 gross receipts tax + $0 net income tax = about $112.80. Under the old rules this business would have owed nothing; now it files and pays.
- Restaurant group, $2,000,000 in receipts, $150,000 net income: $2,820 gross receipts tax + $8,565 net income tax = about $11,385 a year.
The exemption that disappeared
For years, Philadelphia exempted the first $100,000 of gross receipts (plus a proportionate share of net income) from BIRT. After a legal challenge, the city eliminated that exemption for tax year 2025. If you have any Philadelphia receipts at all, you now must file, even if you owe very little. First returns under the new rule were due April 15, 2026. Philadelphia extended its new-business estimated-payment relief to existing businesses filing for the first time in 2026, and net operating losses from 2022 onward carry forward up to 20 years.
Rates are scheduled to keep falling
The FY2026 budget (Bill No. 250199) enacted a long-term strategy: the gross receipts portion is targeted for elimination entirely (0 mills) and the net income portion is targeted for 2.80% by FY39, tied to pension-fund funding milestones. The city has not published a fixed year-by-year schedule, so this page uses the latest published rates (tax year 2025) and we will update the calculator as new rates are released.
Do not forget the Net Profits Tax
BIRT is not Philadelphia's only business tax. The Net Profits Tax (NPT) also applies to business profits, but you get a 60% credit against it for the BIRT net-income portion, which softens the combined bill. This calculator covers BIRT and the license; talk to a tax professional about the full picture.
Where to file and apply
- Philadelphia Department of Revenue: phila.gov business taxes
- Commercial Activity License: apply through the city's online tax center; it is free and lasts the life of the business.
- Free business tax preparation help: phila.gov/businesstaxprep
Frequently asked questions
How much does a business license cost in Philadelphia?
Nothing. The Commercial Activity License is free and lifetime. The real cost is the BIRT tax, which applies from the first dollar of receipts.
What is BIRT?
The Business Income and Receipts Tax: Philadelphia's tax on businesses, with two parts. You pay 0.141% (1.410 mills) on gross receipts plus 5.71% on net income, using tax year 2025 rates.
Is there really no $100,000 exemption anymore?
Correct. The exemption was eliminated for tax year 2025 after a legal challenge. If you do business in Philadelphia, you file, even under $100,000 in receipts.
Do I owe BIRT if my business lost money?
You still owe the gross receipts portion on your receipts, but the net income portion is zero in a loss year. Losses from 2022 onward can be carried forward up to 20 years.
Will BIRT rates change?
Yes, downward, in principle. The city has enacted a long-term plan to eliminate the gross receipts portion and cut the net income rate to 2.80% by FY39, but no fixed year-by-year schedule is published. We update this page as rates are released.
Sources
Every figure on this page comes from an official city source, verified September 2026:
- Business Income and Receipts Tax (BIRT), official rate table (tax year 2025: 1.410 mills / 5.71%) - phila.gov
- Philadelphia business tax changes starting FY26 (Bill No. 250199 long-term reduction plan) - phila.gov (PDF)
- Historic tax rate schedule (Commercial Activity License free since 2014) - phila.gov (PDF)
Rates shown are tax year 2025, the latest published by the Philadelphia Department of Revenue. Tax year 2026 rates had not been published as of September 2026, so confirm current rates with the city before finalizing your business budget. Last updated September 2026.