Kevin Moyer explains Philadelphia's 2025 tax overhaul for landlords: the $100,000 exemption is gone, so you now owe tax on both gross receipts and net profit. File both BIRT and NPT or the city can freeze your rental license, even if you owe nothing. Only Seattle, Los Angeles, and San Francisco have similar dual-tax structures.
Hey guys, Kevin Moyer with The Rowe Report here. It is tax season. What does that mean for Philadelphia landlords? Well, it's time to pony up and pay the city for the privilege of doing business as a landlord in Philadelphia. What does that mean for 2025? There are some significant changes that you should be aware of that especially affect smaller property owners. So in Philadelphia, you're required to file two different returns as a landlord: the BIRT, the Business Income Receipt Tax, and the NPT tax, the Net Profit Tax. These are two different returns that are required in Philadelphia, but there have been some changes recently. Previously, the way the taxes were structured, essentially you didn't have to pay on the first $100,000 of your gross receipts. That is over in 2025. So Philadelphia is now taxing, taxing you on the top line, your gross receipts, so everything that you bring in before expenses, and then you're also taxed on your net as well. So those two taxes, it was set up that way previously with a cushion at that first $100,000, so you only paid on the gross receipts over that $100,000. That is gone in 2025. Philly wants a piece of the pie on the top line and on the net line as well. So how's that structured? The BIRT now has two components to it, and you'll be, like I said, taxed on your top line gross receipts and then taxed on the net as well. So it's a double hitter. The NPT is largely phased out now as a result of that BIRT and the credits that you'll get for it. It's not really important, and I can show you, uh, on a chart what it's ultimately going to mean for your tax obligation, but you do still need that filing. So again, the BIRT changes, your tax obligations will be higher this year because you don't have that $100,000 cushion, and you do have to do those two filings. It's a common misconception. Often the Department of Revenue will put a hold on property owners' accounts. They can't get a rental license. They think I paid my property taxes, I paid in full, I have a $0 balance. In reality, the Department of Revenue wants your filings, not necessarily the money. So you have to log into your portal through the Department of Revenue and see what filings are missing in the eyes of the department to make sure you do all of those tax filings, and then you'll have to pay your obligations as well. So again, changes in 2025, your tax obligations will be higher as a business in Philadelphia. You don't have that $100,000 cushion anymore. You're paying on the top line and on the bottom. There's only a couple other cities in the entire country that do it that way that I'm aware of. Seattle, Los Angeles, and San Francisco. Philly is up there now. They want their piece of the pie. And then make sure to file those returns, the NPT and the BIRT. Uh, get those in so you don't get a hold on your rental license.
