Before you start

An SSN or ITIN
Form W-4 with your employer for federal withholding
Pennsylvania and Philadelphia withholding set up correctly
Records of foreign income and foreign financial accounts

Step-by-step

1
Complete the W-4 and confirm local withholding on day one
Check specifically whether your employer withholds the Philadelphia Wage Tax. If they are based outside the city they may not, and you become responsible for paying the Earnings Tax yourself.
Via employerWho: YouFirst week of employment
2
Register for the Earnings Tax if your employer does not withhold
Philadelphia residents owe the Wage Tax on all earned income regardless of employer location. If it is not withheld you must register with the city and pay quarterly. Remote workers with out-of-state employers are the group most often caught out.
OnlineWho: YouFirst month
3
Check whether you qualify for the income-based refund
Philadelphia refunds a portion of the Wage Tax to workers below an income threshold, linked to Pennsylvania's tax forgiveness programme. It must be applied for and a great many eligible people never do.
OnlineWho: You
4
Determine your US tax residency
The substantial presence test counts weighted days over three years. Your visa does not decide this.
OnlineWho: You
5
File federal, Pennsylvania and Philadelphia returns
The tax year is the calendar year, with federal and state returns due 15 April. The city has its own filing obligations depending on your situation. Software handles federal and state; the city piece often needs separate attention.
OnlineWho: YouBy 15 April annually
6
File an FBAR if foreign accounts exceed $10,000
Aggregate foreign account balances over $10,000 at any point in the year trigger a FinCEN filing, separate from your tax return.
OnlineWho: You

Documents you’ll need

Form W-2 from each employer, issued by 31 January
Form 1099s for freelance, interest and investment income
Philadelphia Wage Tax withholding records
Passport and travel history for the substantial presence day count
Foreign account statements for FBAR reporting

Things most newcomers don’t know

Philadelphia and New York are the only cities here with a municipal income tax.

Every other US city in this app — Los Angeles, Chicago, Boston, Seattle, Miami, Austin, Atlanta, Denver, San Diego, San Francisco — levies none. Philadelphia's Wage Tax follows the resident wherever they work, so moving to the suburbs and keeping the same job genuinely changes your tax bill. It is the single most consequential local financial fact.

Source: City of Philadelphia — Wage Tax

Pennsylvania's 3.07% has no standard deduction, which changes who it favours.

A flat rate applied from the first dollar with no deduction is very favourable to a high earner and comparatively harsh on a low one. Combined with the Wage Tax refund for lower incomes, the system is trying to correct for that — but only for those who apply.

Source: Pennsylvania Department of Revenue

The income-based Wage Tax refund is real money that goes unclaimed.

Philadelphia refunds part of the Wage Tax to workers below an income threshold, tied to Pennsylvania's tax forgiveness schedule. It requires an application. Nobody is told about it at hiring, and eligible people routinely go years without claiming.

Source: City of Philadelphia — income-based Wage Tax refund

Clothing is exempt from Pennsylvania sales tax.

Pennsylvania does not tax most clothing or groceries, which meaningfully lowers the effective cost of living against states with a broad sales tax base. It is a small thing that adds up, and it partly offsets the Wage Tax.

Source: Pennsylvania Department of Revenue

Common mistakes to avoid

Living in Philadelphia with an out-of-city employer and never registering to pay the Earnings Tax.
Not applying for the income-based Wage Tax refund when eligible.
Using a Wage Tax rate from before the five-year reduction plan began in 2025.
Assuming your visa type settles your tax residency.
Missing the FBAR because a home-country account did not feel 'foreign'.

Some of this may be out of date. Spotted something inaccurate? Help us keep it right for the next newcomer.

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