Philadelphia Business Income & Receipts Tax (BIRT): Who Files and How

Last updated August 12, 2026

·Independent Pennsylvania tax education

The Business Income & Receipts Tax (BIRT) is Philadelphia's main tax on doing business in the city. This guide explains its two parts, who has to file, and how BIRT interacts with the Net Profits Tax so you can file correctly.

Key takeaways

BIRT is one return with two parts: a tax on gross receipts and a tax on taxable net income. Both apply.
Almost anyone conducting business for profit in Philadelphia must file, including freelancers, 1099 recipients, landlords, and out-of-state sellers with economic nexus.
Starting with Tax Year 2025, the old rule that let businesses under $100,000 in gross receipts skip filing has ended, so essentially all businesses operating in Philadelphia must file.
BIRT and the Net Profits Tax (NPT) are separate taxes; non-corporate businesses can owe both on the same activity, softened by a partial credit.
Rates, thresholds, and exemption rules have changed recently, so confirm current-year numbers at phila.gov before you file.

What BIRT is

The Business Income & Receipts Tax is Philadelphia's primary tax on doing business in the city. Despite the single name, it has two components that are filed together on one return: a tax on gross receipts and a tax on taxable net income. Both parts apply.

The gross receipts component is based on your Philadelphia revenue, and the net income component is based on your taxable profit. Because the gross receipts piece is tied to revenue rather than profit, BIRT can apply even in a low-profit or no-profit year.

BIRT is defined and governed by the Philadelphia Code and administered by the City of Philadelphia Department of Revenue. For the authoritative rules, see the Department of Revenue's BIRT overview and the compiled BIRT regulations on phila.gov.

Who has to file

BIRT reaches almost anyone conducting business for profit in Philadelphia. That includes every individual, partnership, association, LLC, and corporation engaged in a business, profession, or other activity for profit in the city, such as vendors, retailers, manufacturers, freelancers and other 1099 recipients, and real estate rental activity.

Businesses located outside Philadelphia can also owe BIRT if they have economic nexus with the city. Historically that has meant generating at least $100,000 in Philadelphia gross receipts in a 12-month period, though you should confirm the current nexus standard at phila.gov. Note that federal Public Law 86-272 still limits the net income tax for certain out-of-state sellers of tangible goods.

Starting with Tax Year 2025, essentially all businesses operating in Philadelphia must file. The prior rule that let businesses under $100,000 in gross receipts skip filing has ended; see the rates and exemption section below.

One clear exclusion: a person engaged exclusively in a hobby or other genuinely not-for-profit activity is outside the definition of "business" in Section 19-2601 of the Philadelphia Code and is not required to file.

Individuals, sole proprietors, partnerships, LLCs, associations, and corporations doing business for profit in Philadelphia
Freelancers and 1099 recipients, vendors, retailers, manufacturers, and real estate rental activity
Out-of-city businesses with economic nexus (confirm the current standard at phila.gov)
Not required: activity that is purely a hobby or genuinely not-for-profit under Code Section 19-2601

BIRT vs. the Net Profits Tax

BIRT is a separate tax from Philadelphia's Net Profits Tax (NPT), and a business can owe both on the same activity. The two taxes cover different populations.

BIRT applies to all business types, including corporations. NPT applies only to non-corporate entities: partnerships, LLCs, and sole proprietors. So a corporation pays only BIRT, while a non-corporate business, such as a freelancer or 1099 recipient, must file and pay both BIRT and NPT.

To reduce this double taxation, a taxpayer subject to NPT gets a credit against NPT of up to 60% of the tax paid on the net income portion of BIRT. Treat that percentage as subject to change and confirm the current credit at phila.gov. If you also have wage income or work across municipalities, keep BIRT and NPT distinct from your Pennsylvania PA-40 return and any local Earned Income Tax (EIT) you owe where you live.

Rates, thresholds, and the exemption change

BIRT rates change from year to year, so this guide does not state a current rate. The net income rate has been stepping down and the gross receipts rate is scheduled to phase out over time. Confirm the current gross receipts and net income rates at phila.gov before relying on any figure.

The City has offered transition relief. Businesses that had no BIRT filing requirement in 2022, 2023, and 2024 because their Philadelphia sales were under $100,000 are treated as "new businesses" and do not owe an estimated payment when they file their first return in 2026; they pay only on 2025 activity. Confirm the details of this relief at phila.gov.

On losses: net operating losses incurred in tax years 2022 and later may be carried forward 20 years, while losses from before 2022 may be carried forward only 3 years.

How to file and pay

File and pay BIRT online through the Philadelphia Tax Center at tax-services.phila.gov. Start at phila.gov/BIRT for the forms and instructions.

Before you file, register your business with the City and obtain a Business Income and Receipts Tax ID. Then file the BIRT return by April 15 for the previous calendar year, reporting both the gross receipts and net income components on the same return.

New filers get a break on estimates: a new business does not pay estimated tax when filing its first BIRT return. On the second year's return it generally must pay an estimated payment equal to 100% of the prior year's actual tax, so plan for that cash-flow bump.

If you are a non-corporate business (sole proprietor, partnership, or LLC), also file the Net Profits Tax and claim the available credit for BIRT net income tax paid. If you had no tax liability, check whether a No Tax Liability (NTL) form applies for your year, and confirm your current filing obligations at phila.gov given the exemption change.

Because rates, thresholds, and exemption rules have changed recently, verify the current-year numbers on phila.gov or consult a PA-licensed CPA or tax professional before filing.

Register and get a Business Income and Receipts Tax ID before filing
File and pay at tax-services.phila.gov; forms and instructions at phila.gov/BIRT
BIRT is due April 15 for the prior calendar year, covering both components on one return
Non-corporate filers: also file NPT and claim the BIRT net income credit
When in doubt, confirm current numbers at phila.gov or ask a PA-licensed pro

Common mistakes and exemptions

The most common trap now is assuming small revenue means no filing. For Tax Year 2025 and after, the $100,000 exemption that let low-revenue businesses skip filing has been removed; confirm the current threshold at phila.gov.

Non-corporate filers often forget that BIRT and NPT are two different taxes and that they commonly owe both. When you do owe both, do not miss the NPT credit of up to 60% of the BIRT net income tax paid, which is there specifically to reduce the overlap.

Two more pitfalls: being surprised by the second-year estimated payment, and reading BIRT purely as a net income tax while ignoring the gross receipts component, which can apply even in a low- or no-profit year. Finally, do not rely on last year's rate or exemption figures, because BIRT rules have been changing; verify current-year numbers at phila.gov before you file, and consult a PA-licensed tax professional if your situation is unclear.

Best practices

Register with the City and get your Business Income and Receipts Tax ID before you try to file.
File and pay online at the Philadelphia Tax Center (tax-services.phila.gov), reporting both the gross receipts and net income components on the same return.
If you are non-corporate, file the Net Profits Tax too and claim the credit of up to 60% of the BIRT net income tax paid.
Confirm the current-year rates, thresholds, and exemption status at phila.gov every year, since these have been changing.
Budget for the second-year estimated payment, which generally equals 100% of the prior year's actual tax.
When your situation is unclear, consult a PA-licensed CPA or tax professional before filing.

Common mistakes

Assuming small gross receipts mean you don't have to file; for Tax Year 2025 and after the $100,000 filing exemption is gone.
Treating BIRT and NPT as the same tax; non-corporate businesses commonly owe both and must file both returns.
Missing the NPT credit of up to 60% of the BIRT net income tax paid.
Being caught off guard by the second-year estimated payment after skipping estimates in year one.
Reading BIRT as only a net income tax and ignoring the gross receipts component, which can apply in a low- or no-profit year.
Relying on last year's rate or exemption figures instead of verifying current-year numbers at phila.gov.

Official Pennsylvania sources

Philadelphia Business Income & Receipts Tax (BIRT)
BIRT rules, rates, thresholds, forms, and filing instructions.
Philadelphia Net Profits Tax (NPT)
Net Profits Tax rules for non-corporate Philadelphia businesses and the BIRT credit.
Philadelphia Tax Center
File and pay Philadelphia taxes online — Wage/Earnings, BIRT, NPT, and realty transfer.
City of Philadelphia Department of Revenue
Philadelphia-specific taxes (wage, BIRT, NPT, real estate).

Frequently asked questions

Does BIRT have one part or two?

Two, filed together on one return: a tax on gross receipts and a tax on taxable net income. Both parts apply, which is why BIRT can be owed even in a low-profit year.

Do I still get the $100,000 exemption?

No. Due to a legal challenge, the $100,000 BIRT exemption and exclusion is not available for Tax Year 2025 and thereafter; Tax Year 2024 was the last year to use it. Confirm the current filing threshold and exclusion status at phila.gov.

Do I owe both BIRT and the Net Profits Tax?

If you are a non-corporate business, such as a sole proprietor, partnership, or LLC, you can owe both on the same activity. Corporations pay only BIRT. Non-corporate filers can claim a credit against NPT of up to 60% of the BIRT net income tax paid; confirm the current percentage at phila.gov.

When is BIRT due?

BIRT returns and payments are due April 15 each year for the prior calendar year's business activity. Confirm the current deadline at phila.gov.

Do new businesses pay estimated tax?

A new business does not pay estimated tax when filing its first BIRT return. On the second year's return it generally must pay an estimate equal to 100% of the prior year's actual tax. There is also transition relief that treats certain previously exempt businesses as 'new'; confirm details at phila.gov.

What are the current BIRT rates?

Rates change annually, with the net income rate stepping down and the gross receipts rate scheduled to phase out. This guide does not state a current rate; confirm the current gross receipts and net income rates on the Department of Revenue's BIRT page at phila.gov before filing.

Next read

Pennsylvania Small Business Tax

BIRT is only Philadelphia's slice. See how it fits with the rest of your Pennsylvania business tax obligations.

SEO Quality Rating

How we currently rate this article. Updated as the content evolves.

Target keyword: philadelphia birt
Search intent: A Philadelphia business owner wants to understand BIRT: who must file, its gross-receipts and net-income parts, the removed $100k exclusion, and how it interacts with NPT.

Content depth8/10

Internal linking7/10

Local relevance10/10

E-E-A-T7/10

Overall SEO readiness8/10

Explanation

Explains the two-component structure, who must file, the Tax Year 2025 removal of the $100,000 exclusion, the BIRT/NPT relationship and 60% credit, and the second-year estimate, with current rates deferred to phila.gov. Lacks a signed CPA review byline.

Suggested improvements

Add an expert review byline from a PA-licensed CPA.
Add a worked BIRT + NPT credit example.
Add a first-year filing checklist for new Philadelphia businesses.

Back to pa.tax