About 50,000 low-income Philadelphians could get their city wage taxes back, but few apply

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Philadelphia has offered a city wage tax refund to eligible low-income households for 15 years — but fewer than 1% of eligible households apply for it.

The city estimates about 50,000 workers are eligible for a portion of the 3.4% city wage tax refund.

The average household can get between $300 and $400 each year during tax season — the deadline for which is April 15.

To make the application easier, the city moved to an online filing system that doesn’t require any login or passwords and started sending mass mailers to eligible residents with information about the process.

In 2023, there were 1,300 applications approved for refunds, according to the city revenue department. By 2024, there were 2,700 applications approved. So far this year, at least 2,700 applications have been cleared already.

While the program is gaining some popularity, there’s a long way to go, said Kathleen McColgan, Philadelphia’s revenue commissioner.

“We do know that unfortunately not a high percentage of folks who are eligible for our refund actually apply,” McColgan said. “The goal is to return some of those funds back to folks who meet the income eligibility and help them provide for their families and contribute to the economy and improve their lives.”

In 2021, then-Councilmember Allan Domb successfully spearheaded legislation to increase the city wage tax reimbursement rate from 0.5% to 2.3% for low-income workers.

This year, there’s an effort in Philadelphia City Council to expand the program eligibility requirements to reach more households.

Working Families Party Councilmembers Kendra Brooks and Nicolas O’Rourke introduced an alternative tax plan that included the income-based wage tax refund program expansion.

Under the proposal, individuals earning $33,000 or less and joint filers earning under $41,000 a year would be eligible for a city wage tax refund.

The wage tax refund can be used alongside two other tax credits: the Earned Income Tax Credit and the Child Tax Credit.

Families with three children filing jointly can earn as much as $66,819 in the past year and still be eligible for money back through the earned income tax credit from the federal government.

The city set up a dedicated website to encourage residents to apply for the federal funds, too.

Local nonprofits like the Campaign for Working Families, Ceiba and the Philadelphia Chinatown Development Corporation help residents with free tax preparation. There’s also Volunteer Income Tax Assistance sites across the region, also known as VITA, in collaboration with the IRS.