Philadelphia
Philadelphia's Wage Tax is the local rule that changes payroll here. The city's rate table lists 3.735% for residents and 3.425% for nonresidents as of July 1, 2026, and employers withhold it. On the sales side, Pennsylvania taxes residential and commercial cleaning, and Philadelphia's 2% local sales tax on top of the 6% state rate makes 8% combined.
Payroll and sales tax are where Philadelphia shows up first in a cleaning company's books, with sick leave and a city license close behind. Statewide payroll registration and the employee test are on my Pennsylvania page. Below: the Wage Tax, the 8% combined sales tax, sick leave and licensing, and what all of it means for your books.
The Department of Revenue's rate table lists the Wage Tax at 3.735% for residents and 3.425% for nonresidents as of July 1, 2026, down from 3.74% and 3.43% on July 1, 2025. Employers withhold it from Philadelphia residents and from nonresidents who perform services for a Philadelphia employer, and file through the city's Tax Center. The registration rule is stated for employers located in Pennsylvania: they "must register with the City within 30 days of becoming an employer of a Philadelphia resident or of a non-resident performing services in Philadelphia." For employees whose employer doesn't withhold the Wage Tax, the city's Earnings Tax page lists the same rates. Neither page shows an update date.
Source: City of Philadelphia Department of Revenue, Wage Tax (employers) (rate table lists July 1, 2026)
Residential and commercial cleaning are both taxable in Pennsylvania. The Department of Revenue's rate table lists the 6% state sales tax and a 2% Philadelphia local sales tax, without a combined total or an effective date, so the 8% is the sum of the two. Act 21 of 2026, enacted July 12, 2026 and enforced from October 1, 2026, moved local sales tax to destination sourcing: vendors collecting the 6% state tax must also collect the local tax on taxable sales delivered in Philadelphia. It reaches back to tax years after December 31, 2025. The state-level rules are on my Pennsylvania sales tax page.
Source: Pennsylvania Department of Revenue, Current Tax Rates
Source: Pennsylvania Department of Revenue, Local Sales Tax (Act 21 of 2026)
Philadelphia's sick leave law requires paid sick leave from employers with 10 or more employees and unpaid sick leave from employers with nine or fewer. Employees earn one hour for every 40 hours worked, up to 40 hours a calendar year. Complaints go to the Office of Worker Protections.
Source: City of Philadelphia Department of Labor, Office of Worker Protections, Paid sick leave
Licensing is a separate matter. The Department of Licenses and Inspections says any person or entity doing business in Philadelphia needs a Commercial Activity License, including businesses located outside the city. Applicants need their City tax account information and must be current on all City taxes.
Source: City of Philadelphia Department of Licenses and Inspections, Get a Commercial Activity License
Withheld Wage Tax goes to its own liability account, kept by rate, since residents and nonresidents are withheld differently. The Wage Tax isn't just a deduction on a pay stub. It's money you're holding for the city, it's a resident or nonresident rate tied to each person on payroll, it's a balance that has to match what goes through the Tax Center before the account is clear. Collected sales tax sits in a liability account apart from revenue, and at 10 or more employees, paid sick hours get tracked as they accrue. Payroll is recorded at the wage you actually pay, which my payroll page walks through.
I'm a bookkeeper, not a CPA or an Enrolled Agent. I keep the city's taxes in their own accounts; which rate applies to which employee, and how the Wage Tax and sales tax get reported, are questions for your CPA.
Rules checked against the sources above as of October 20, 2026. Rates and rules change; confirm current figures with the agency or your CPA.
About Figure Eight Financial
Figure Eight Financial is Dave Gordon’s bookkeeping practice for residential and commercial cleaning companies. I work with owners in Philadelphia and across the country, and I’m a Certified QuickBooks Online ProAdvisor.
Before bookkeeping I studied computer science at Penn State and spent a career at IBM as an engineer, so I build the books as a system: data comes in once, lands in the right place, and ties back to a statement. I’m a bookkeeper, not a CPA or Enrolled Agent. I keep the books your CPA works from, and the tax decisions stay with your CPA.
Credentials and memberships reported by Figure Eight Financial.
More about DaveHow I Help
Philadelphia puts two city taxes into a cleaning company's books: the Wage Tax withheld from pay and the 2% local sales tax on top of the state's 6%. Each gets a liability account of its own, with withheld Wage Tax kept by resident and nonresident rate so the balance matches what's owed. Book a short call below and walk me through how your Philadelphia payroll runs.
The core service. Transactions recorded and categorized, every account reconciled so the books and the bank agree, and monthly reports that arrive explained, split by residential and commercial and sliceable per contract.
The full picture of how this works for a cleaning companyFor the months where nothing got entered at all. I fill in the missing periods from the ground up, pulling bank feeds, statements, and receipts until every month has a complete set of records.
How catch-up bookkeeping worksFor books that exist but can’t be trusted. I audit what’s there, fix the unreconciled accounts, duplicate transactions, and wrong categories, and tie every balance back to a statement.
How cleanup bookkeeping worksYour crews paid on time, every pay period, with each payroll run recorded in the books so labor shows up against the jobs it belongs to.
How payroll worksRecurring invoices that match your contracts, an aging report you can trust, and follow-up on slow payers handled by a process instead of your evenings. Built for net-60 commercial accounts.
How invoicing and receivables workA file built right for a cleaning company from day one, or rebuilt after the DIY version drifts, and then I teach you to run it. I’m a Certified QuickBooks Online ProAdvisor, and this is honestly my favorite part of the job.
How a proper setup worksWe start with a short call about your business and where the books stand. The first conversation doesn’t cost anything.
I take a look at what you’ve got, your QuickBooks file, your spreadsheet, whatever exists.
You get a written proposal with the price, so the decision is yours with the number in hand.
Let's Connect
Running crews in Philadelphia and not sure your books keep the Wage Tax apart from everything else? Tell me how payroll runs today. The first conversation doesn't cost anything.
