Philadelphia Offers Relief for Businesses Paying BIRT for First Time

The City of Philadelphia has clarified its policy to support businesses required to file and pay the Business Income & Receipts Tax (BIRT) for the first time in Tax Year 2025. Businesses that weren't required to file in the past three years will be treated as "new businesses" and won't have to make an estimated payment for 2025. They'll have options to pay in quarterly installments or in full for 2026 and 2027, and a full estimated payment in 2028.

The City of Philadelphia has announced a significant policy clarification to support businesses that will be required to file and pay the Business Income & Receipts Tax (BIRT) for the first time in Tax Year 2025. This change, effective from April 2026, will impact businesses that were previously exempt from filing due to sales under $100,000 in the past three years [2].

Businesses that fall under this category will be treated as "new businesses" and will not be required to make an estimated payment for 2025. Instead, they will only need to file their first tax return and pay for 2025 activity in April 2026 [2]. This exemption aims to ease the transition for businesses that were previously not subject to the BIRT.

For the subsequent tax years, these businesses will have the option to pay their estimated taxes in quarterly installments or in full for 2026 and 2027. In 2028, they will be required to make a full estimated payment that is equal to the amount of the prior year's tax due [2].

The Philadelphia Department of Revenue recommends that businesses work with trusted tax professionals to navigate these new requirements. Additionally, the Department of Commerce is offering in-person workshops and other resources to assist businesses in understanding the new tax regulations and preparing for filing [1].

The City has also announced that new businesses, those who have never filed a tax return in Philadelphia, can bypass their first estimated payment since 2018. For other businesses, a 100% estimated payment for the current year is required at the time they are filing the prior year’s tax return [2].

Businesses are encouraged to stay informed about future announcements regarding free tax preparation services and expanded grant programs. For more information, interested parties can sign up for the City's newsletter [2].

References:
[1] https://www.facebook.com/PIDCphila/posts/the-100000-birt-exemption-is-not-available-in-2025-all-businesses-will-need-to-f/1352183376914829/
[2] https://www.phila.gov/2025-08-05-worried-about-making-estimated-birt-payments-next-year-were-giving-you-options/