What Is the Philadelphia BIRT and Who Needs to File?

There is no federal “1020 tax form.” The name is almost always a mix-up for Philadelphia’s Business Income and Receipts Tax return, known as the BIRT, filed with the City of Philadelphia’s Department of Revenue rather than the IRS. It applies to businesses operating inside Philadelphia, and as of 2025 the city eliminated the $100,000 gross receipts exemption that had kept many small businesses off the rolls, so the pool of filers is now much larger than it used to be.¹

Who Has to File the BIRT

Every entity doing business inside Philadelphia has to file a BIRT return, no matter where the business is based. That covers sole proprietors, partnerships, LLCs, and corporations alike. If you make sales, provide services, or generate revenue within city limits, the filing obligation is on you.²

Nonresidents are included. A business headquartered in the suburbs that performs work in Philadelphia or sells to Philadelphia customers has nexus with the city and must file. Remote and digital businesses fall in too if their activity connects to Philadelphia.³

A few categories sit outside the BIRT entirely. Charitable organizations, nonprofits, life insurance companies, mutual fire insurance companies, and fraternal benefit societies are not treated as taxable businesses under the code and do not file. Employees earning wages are also outside the scope, since the job relationship is not a separate business activity.³

The $100,000 Exemption Is Gone

For years, businesses with less than $100,000 in annual gross receipts could exclude that amount from the receipts side of the BIRT, and many small operators effectively owed nothing on that portion. The city eliminated the exemption in 2025 in response to a legal challenge.¹

That is where a lot of small business owners are getting caught. If you previously sat under the $100,000 threshold and never paid much attention to BIRT, you now owe tax on every dollar of gross receipts and have to file, even if the amount owed is small.⁴

The city built in one cushion. Businesses that must file BIRT for the first time in 2026 because of the exemption change do not owe estimated taxes for the next year if they had no BIRT filing requirement in 2022, 2023, and 2024.⁴

What the Tax Charges

The BIRT is a two-part tax. One piece hits your gross receipts, meaning total revenue from sales and services in Philadelphia before expenses. The other hits net income, which is closer to profit after allowable deductions. You calculate both separately and add them together for your total BIRT liability.³

Rates change each year. For tax year 2026, the gross receipts rate is 1.395 mills per dollar of receipts, or roughly $1.40 per $1,000 in revenue, and the net income rate is 5.65%.

BIRT Is Not the Same as the Net Profits Tax

Philadelphia runs two separate business taxes, and confusing them is a common source of penalties. BIRT applies to all business entities operating in the city. The Net Profits Tax (NPT) is a distinct obligation aimed at self-employed individuals: Philadelphia residents who are self-employed owe it even when all their work happens outside the city, and nonresidents owe it on profits from business conducted inside Philadelphia.²

If you are a sole proprietor or partner operating in Philadelphia, you likely owe both, on separate returns. Filing one does not satisfy the other.

Deadline, Filing, and Penalties

The annual BIRT return is due April 15 for the prior calendar year. A federal filing extension from the IRS automatically extends your BIRT filing deadline too, with no separate form. An extension to file is not an extension to pay: any tax owed after April 15 accrues interest and penalties.⁵

The city’s preferred method is electronic filing through the Philadelphia Tax Center, where you can submit the return, pay, and review your history. Paper returns are still accepted.⁴

Miss the deadline and the city charges a penalty of 1.25% of the unpaid balance per month. Interest runs on top of that at 9% per year, or 0.75% per month, for 2026.⁶

You Also Prepay for Next Year

When you file the BIRT return each April, you also owe an estimated payment for the following year. That estimate equals 100% of your actual BIRT liability from the prior year and is due in full by April 15. In practical terms, April brings both last year’s final bill and next year’s deposit.⁴

New businesses catch a break. On your first-ever BIRT return, you owe no estimated tax for the following year. On your second return, you owe the estimate but can split it into quarterly installments due April 15, June 15, September 15, and January 15. After that, the estimate is due as a single April 15 payment.⁴

Jump Start Philly Can Wipe Out the Tax for New Businesses

New businesses that meet certain hiring conditions can avoid the BIRT entirely for their first two years through Jump Start Philly. To qualify, the business must be genuinely new (no BIRT return filed in the prior five years), must not be involved in real estate activities, and must hire at least three employees by the end of year one and six by the end of year two.⁷

There is no standalone Jump Start form. You apply as part of the paper application for a Commercial Activity License. If you claim the exemption, you still have to file a paper BIRT return and include the Worksheet N form. The tax drops to zero, but the return itself is not optional.⁷

1
City of Philadelphia. City of Philadelphia Clarifies Business Income and Receipts Tax (BIRT) Policy
2
City of Philadelphia. BIRT and NPT – Philly Business Taxes Explained
3
American Legal Publishing. Philadelphia Code 19-2600 – Business Income and Receipts Taxes
4
City of Philadelphia. Business Income and Receipts Tax (BIRT)
5
City of Philadelphia. Key Things to Remember Ahead of Tax Day
6
City of Philadelphia. Interest, Penalties, and Fees
7
City of Philadelphia. Jump Start Philly