This tax season, Philadelphia isn’t offering the 1% discount on real estate taxes for early payment that it has given in years past.
The early-bird discount is yet another casualty of the COVID-19 pandemic.
The change came last year as a result of the economic downturn from the pandemic, the mayor’s office said — a $750 million deficit Mayor Jim Kenney had to figure out a way to close.
“The Mayor proposed a series of difficult revisions to his original proposal, including this,” the office wrote in a statement.
Those changes were approved as part of the overall budget and five-year plan approved by City Council in June. The tax incentive was known to help the city’s cash flow, but not enough to keep it.
The mayor’s office projects that eliminating the discount will increase city revenues by about $6 million in fiscal year 2021. Those additional funds will go to the general fund. The change also affects the Philadelphia School District’s portion of the real estate tax, leading to $7 million in additional funds to support education, officials said.
Before the pandemic, paying before the last day of February meant getting the 1% discount. Real estate taxes are due March 31. The Department of Revenue usually mails real estate tax returns in December.
Darwin Beauvais, a real estate lawyer, is sad to see the discount go but understands why it happened. Still, he wonders if there was a way to keep it.
“It’s not a cut, and they’re trying to find a way to nickel-and-dime because of the pandemic,” he said.
Beauvais hopes the discount returns. He also thinks there’s a chance that if the discount were promoted heavily and extended, it might encourage more people to pay early, increasing cash flow quickly.
“Something is better than nothing,” he said. “The city should have more faith in people.”
Ronald Patterson, a zoning lawyer at Klehr Harrison, said it’s unfortunate that homeowners will miss out. In his experience, he said, most people unknowingly benefited from the discount because most homes have mortgages and mortgage companies receive tax bills and pay them swiftly, typically before the deadline.
“I understand that the city needs to replenish its accounts,” Patterson said. “But I hope that when the city is back to its former financial equilibrium, it would reinstitute this discount.”
WHYY is one of over 20 news organizations producing Broke in Philly, a collaborative reporting project on solutions to poverty and the city’s push towards economic justice. Follow us at @BrokeInPhilly.
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