City of Philadelphia Business Income and Receipts Tax
Dividing Up Your Income

With regards to the Business Income and Receipts Tax (BIRT), the City makes a distinction between income earned in Philadelphia and outside of Philadelphia. The City also makes a distinction between sales and services.

 

Sales that are delivered to a location outside of Philadelphia are not subject to BIRT. This includes sales delivered electronically.

 

Example #1: Artist living in Philadelphia sells a painting to a collector who lives in New Jersey: NOT TAXABLE

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Example #2: Graphic designer living in Philadelphia sells digital graphic design to a business located in California: NOT TAXABLE

 

Example #3: Artist living in Philadelphia is commissioned by a Philadelphia-based business to create a sculpture installed at one of their satellite locations in the Philly suburbs: NOT TAXABLE

 

Services are subject to BIRT unless they are physically performed outside of Philadelphia.

 

Example #1: Tax preparer living in Philadelphia prepares taxes for a client living in New Jersey: TAXABLE

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Example #2: Musician living in Philadelphia plays a concert in the Philly suburbs: NOT TAXABLE

 

Example #3: Artist living in Philadelphia travels to NJ to teach a workshop: NOT TAXABLE

 

Example #4: Artist living in Philadelphia is hired by a school in NJ to teach an online workshop that they teach from their home: TAXABLE

 

As you review your 1099 and cash income for the past year, please note the amount of income that was from sales delivered to or services performed in a location outside of Philadelphia and provide that information to your tax preparer when you meet. We will be able to exclude income from the BIRT based on that information.

 

NOTE: Real estate rental income from properties outside of Philly is excluded from the BIRT.