Business Privilege Tax (BPT) Reform Legislation

City Councilmembers Bill Green and Maria Quiñones Sánchez have introduced legislation to bring much-needed and long-overdue change to Philadelphia’s Business Privilege Tax (BPT). Their proposal would to encourage economic growth in Philadelphia and remove a major disincentive to businesses locating in the city. [View Press Release]

As the country begins to emerge from the recession and entrepreneurs and business owners again gain access to credit, now is the perfect time for Philadelphia to send a strong message that it is ‘open for business’ and a great place for companies to locate and grow. A nationally renowned economist, Mark Zandi, agrees. Check out his [op-ed] in the Inquirer.

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What's this all about?

The BPT consists of two components – a 6.45% tax on net income and a 0.1415% tax on gross receipts. The net income tax is paid primarily by Philadelphia-based businesses, whereas the gross receipts tax is paid by all businesses that make sales in Philadelphia. As a result, there is a disincentive for profitable businesses to headquarter within the city limits, since they can avoid paying the net income tax simply by moving across City Line Avenue.

The proposal would spread the tax burden over a much wider base (all sales in the city by all firms, wherever located) at a very low rate (0.53% of sales), unlike the current tax which applies a very high tax rate (6.45% of net income) on a small base (Philly-based companies). Having a broad-base/low-rate tax structure is a consistent with widely-accepted tax policy.

The shift to gross receipts also will simplify the city’s overly complex business tax structure, eliminate most of the loopholes currently used to minimize BPT liability, and result in a more steady and predictable revenue stream for the City.

Most importantly, unlike the existing system, this tax reform will promote economic growth and job creation in the City of Philadelphia. More companies will want to locate in the city and employ Philadelphians, thereby increasing economic activity and prosperity throughout the city.

Calculate Your Philadelphia BPT

Use the form below to calculate your Business Privilege Tax (BPT). Refer to filed BPT returns for what receipts and net income are taxable under the BPT.




Calculated Taxes

201020112012201320142015
Gross Receipts Regular Rate0.1415%0.1700%0.2600%0.3500%0.4400%0.5300%
Tax000000
Alternative Method Rate - Retailer0.7800%0.8000%0.9000%1.0000%1.0000%1.0000%
Tax000000
Alternative Method Rate - Manufacturer2.3400%2.4000%2.4000%2.5000%2.5000%2.5000%
Tax000000
Alternative Method Rate - Wholesaler3.3000%3.3000%3.4000%3.5000%3.5000%3.5000%
Tax000000
Net Income Tax Rate6.4500%5.2000%3.9000%2.6000%1.3000%0%
Tax000000
Total BPT Tax Expense000000

*Note:If you are a food store with 10% of your sales in fresh foods you need a different calculator. Also, if you have more than one category of receipts income (regular and retail gross -- for example, hotels with restaurants) you need to use this spreadsheet [Download BPT Tax Spreadsheet]. This form allows only one of these gross receipts fields to be included. Always include a receipts field and net income.

For questions or more information please contact us at bill.green[at]phila.gov or maria.q.sanchez[at]phila.gov