2026 Tax Year
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If you work in or live in Philadelphia, your paycheck is doing more math than most: federal FICA, Pennsylvania's flat state tax, and the Philadelphia Wage Tax all get deducted separately. This guide breaks down what FICA actually pays for, the current Philadelphia resident and non-resident Wage Tax rates, and exactly how the two stack up against each other on a real paycheck. To see your own numbers instantly, run them through the Pennsylvania Paycheck Calculator, which already includes Philadelphia local tax and FICA in every estimate.
Quick answer: FICA and the Philadelphia Wage Tax are two completely separate deductions that both show up on a Philadelphia paycheck. FICA is a flat, nationwide federal payroll tax — 6.2% Social Security plus 1.45% Medicare — that funds federal benefit programs and applies no matter where you live. The Philadelphia Wage Tax is a local tax charged only by the City of Philadelphia: 3.735% for residents and 3.425% for non-residents who work in the city (rates effective July 1, 2026). Neither one replaces the other, and neither replaces Pennsylvania's flat 3.07% state income tax — all three are withheld on top of each other. Plug your own salary into the PA Paycheck Calculator to see the combined effect on your take-home pay.
FICA stands for the Federal Insurance Contributions Act. It's the line on your pay stub that funds Social Security and Medicare, and every employee in the United States pays it the same way — Philadelphia doesn't change the rate, and neither does any other city or state.
Withheld on wages up to the annual Social Security wage base ($184,500 for 2026). Your employer matches the 6.2%, so 12.4% total goes toward the program on your behalf.
Withheld on all wages with no cap, plus an extra 0.9% Additional Medicare Tax on earnings above $200,000 (single) that your employer withholds but does not match.
FICA is identical for a paycheck issued in Philadelphia, Pittsburgh, or anywhere else in the country. It's a federal tax, not a state or local one, so it never interacts with the Wage Tax directly.
The Philadelphia Wage Tax is a city-level tax on salaries, wages, commissions, and other compensation. It stands in for the local Earned Income Tax that most other Pennsylvania municipalities charge — Philadelphia sits outside that statewide Act 32 system and runs its own tax instead, currently one of the highest local wage taxes of any city in the country.
Owe the Wage Tax on all earned income, regardless of where the work is actually performed — even if a resident's job is based outside the city.
Owe the Wage Tax only on compensation for work physically performed inside Philadelphia. Days genuinely worked outside the city for the employer's benefit are generally not taxed.
Under a five-year plan approved by City Council, both the resident and non-resident rates step down a little each July 1 through fiscal year 2030.
Three separate deductions, three separate rates, three separate governments. Here's how they line up side by side for a Philadelphia paycheck.
| Tax | Who Collects It | Rate (2026) | Applies To |
|---|---|---|---|
| Social Security (FICA) | Federal — IRS/SSA | 6.2% | Wages up to $184,500 |
| Medicare (FICA) | Federal — IRS | 1.45% | All wages, no cap |
| Pennsylvania state tax | PA Department of Revenue | 3.07% flat | All PA-taxable wages |
| Philadelphia Wage Tax — resident | City of Philadelphia | 3.735% | All earned income |
| Philadelphia Wage Tax — non-resident | City of Philadelphia | 3.425% | Philadelphia-source work only |
Rates shown are effective for pay dates on or after July 1, 2026; the prior-year rates (3.74% resident / 3.43% non-resident) applied through June 30, 2026. Philadelphia adjusts both rates every July 1 as part of a multi-year reduction plan, so confirm the current figure with the City of Philadelphia Department of Revenue before relying on it for payroll. See our Pennsylvania state income tax guide for more on the 3.07% flat rate that applies statewide.
Here's roughly how each tax lands on a $75,000 salary for someone who lives and works in Philadelphia, before any pre-tax deductions.
| Deduction | Approx. Annual Amount |
|---|---|
| Social Security (6.2%) | ≈ $4,650 |
| Medicare (1.45%) | ≈ $1,088 |
| Pennsylvania state tax (3.07%) | ≈ $2,303 |
| Philadelphia Wage Tax, resident (3.735%) | ≈ $2,801 |
| Combined tax on this paycheck | ≈ $10,842 |
Illustrative estimate only — federal income tax withholding, benefits, and any additional deductions aren't included here. Notice that FICA and the Wage Tax are each larger, on their own, than the entire Pennsylvania state tax bill. For the exact figure on your own salary and pay frequency, use the Pennsylvania Paycheck Calculator, which factors in Philadelphia's local rate automatically when you select the city.
No — and that's the detail worth remembering. FICA is a federal tax with no connection to state or city tax at all, so it never reduces, credits, or offsets the Philadelphia Wage Tax in any way. Likewise, the Wage Tax doesn't reduce your FICA withholding. Both are calculated independently from your gross wages and withheld on the same paycheck, alongside Pennsylvania's separate 3.07% flat state tax.
Where credits do come into play is between the Wage Tax and other local or state taxes — for example, a non-resident who also pays income tax to another state on the same wages may be able to claim a credit against that state's liability, similar to the mechanics covered in our PA vs. NJ paycheck guide. FICA itself never enters that credit calculation because it isn't an income tax at all — it's a payroll contribution toward federal benefit programs.
Employer withholds FICA automatically: Every employer in the country calculates 6.2% Social Security and 1.45% Medicare from gross wages each pay period — no forms or elections are needed from the employee.
Employer withholds PA state tax and, if applicable, the Wage Tax: A Philadelphia-based employer withholds Pennsylvania's flat 3.07% plus the Philadelphia Wage Tax at the resident or non-resident rate, based on the employee's home address and work location.
Self-employed and 1099 workers file it themselves: Independent contractors pay the self-employment tax version of FICA and, if they live or work in Philadelphia, must file and pay the City's Earnings Tax directly rather than having it withheld — see our Freelancer 1099 Calculator for a self-employment estimate.
Confirm your own numbers: Because Philadelphia's Wage Tax rate changes almost every July 1, the fastest way to check your current withholding is the Pennsylvania Paycheck Calculator, which stays updated with the latest resident and non-resident rates.
Every figure in this guide is drawn from the following official sources. Confirm your own situation directly with these agencies before filing or adjusting payroll.