If your PA LLC does any business in Philadelphia — even remotely — the city has a tax that applies to you. The Business Income and Receipts Tax (BIRT) is Philadelphia’s local business tax, and it’s one of the more misunderstood obligations for LLC owners. Here’s exactly what it is, who owes it, and what changed recently.
What Is the Philadelphia BIRT?
The Business Income and Receipts Tax is a City of Philadelphia tax imposed on every individual, partnership, LLC, and corporation that is engaged in business activity for profit within Philadelphia. It has two components:
You owe BIRT if your LLC is physically located in Philadelphia, has employees or contractors working in Philadelphia, or generates revenue from customers located in Philadelphia. This is a city-level obligation — separate from and in addition to any state or federal taxes.
The $100,000 Exemption Is Gone
For many years, Philadelphia exempted the first $100,000 in gross receipts from BIRT. Small businesses and freelancers with modest Philadelphia revenue could stay below that threshold and owe nothing.
That exemption was eliminated starting tax year 2025. As of 2025 and forward, there is no minimum threshold. Every dollar of Philadelphia business activity is subject to BIRT — regardless of how small your LLC’s revenue is.
If your LLC previously stayed under $100,000 in Philly gross receipts and never filed, that calculation no longer applies. You are now required to file even if your Philadelphia revenue is $5,000 or $500.
Who Owes BIRT?
According to the City of Philadelphia, the following are required to file a BIRT return:
This applies regardless of whether your LLC is profitable. You must file even in a loss year.
Does This Apply to My LLC If I’m Not Based in Philadelphia?
Potentially yes. The BIRT triggers based on Philadelphia nexus — whether your business activity occurred within city limits — not just on where your LLC is registered or headquartered.
If your LLC is based in Montgomery County but you regularly deliver goods, perform services, or meet clients in Philadelphia, you may have Philly nexus and a BIRT obligation. The city looks at where the economic activity actually takes place.
If your LLC operates entirely outside Philadelphia with no Philadelphia customers, employees, or activity, BIRT does not apply to you.
BIRT Filing Deadlines and How to Pay
BIRT is filed and paid annually. Key dates:
| Deadline | What’s Due |
|---|---|
| April 15 annually | Annual BIRT return for prior year + estimated payment for current year |
| First-year exception | New businesses don’t owe an estimated payment in their first year of filing |
| First-time filers (TY2025) | No estimated payment required if you had no BIRT filing requirement in 2022, 2023, or 2024 |
Filing is done through the Philadelphia Tax Center at tax-services.phila.gov. Businesses that owe $5,000 or more must pay electronically. Paper returns are still permitted for businesses below that threshold.
The city is giving first-time BIRT filers affected by the exemption change some breathing room on estimated payments — but only if you genuinely had no BIRT filing requirement in 2022, 2023, and 2024. If you should have been filing before, that protection doesn’t apply.
BIRT vs. Net Profits Tax: What’s the Difference?
Philadelphia also has a Net Profits Tax (NPT), which is sometimes confused with BIRT. They are separate taxes:
| Tax | Who Pays It | Based On |
|---|---|---|
| BIRT | Any business entity with Philadelphia activity | Gross receipts + net income |
| Net Profits Tax (NPT) | Individuals (sole proprietors, partners in partnerships) | Net profit from Philadelphia business activity |
As an LLC owner, BIRT is the business-level tax. The NPT may apply to you personally as a resident or non-resident earning profit from Philadelphia business activity. These can stack. A Philadelphia CPA or tax professional can help you sort out which applies and how to file both efficiently.
What Happens If You Don’t File?
Non-compliance with BIRT carries real consequences. The city can:
If you’ve been doing Philadelphia business and haven’t been filing BIRT, the cleaner path is to get current voluntarily rather than wait for a notice. The city does have a voluntary disclosure program for businesses that come forward on their own.
Frequently Asked Questions
Possibly. If you’re performing services in Philadelphia or delivering goods to Philadelphia customers, you likely have Philadelphia nexus. Consult a tax professional familiar with Philly business taxes to assess your specific activity.
It can. If you’re based in Philadelphia or have employees in Philadelphia, your remote revenue may still be subject to BIRT. The city uses sourcing rules to determine what portion of revenue is Philadelphia-sourced.
The statutory $100,000 exemption is gone. However, businesses with very low activity may effectively owe very little. The city has also publicized grants and assistance programs for small businesses impacted by this change — check phila.gov for current programs.
As soon as your LLC begins business activity in Philadelphia. New businesses don’t owe an estimated payment when they file their first BIRT return — you’ll only pay taxes on actual activity from your first year. But you do need to file that first return.
BIRT is calculated in two parts — on gross receipts and on net income — and you choose the method that results in a lower tax. Philadelphia’s Tax Center has calculation tools, and the annual BIRT instructions walk through the formula. For an LLC with mixed Philadelphia and non-Philadelphia activity, you’ll need to apportion your income based on where it was earned.
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