What Is the Sales Tax Rate in Philadelphia?

Sales tax is a consumption tax applied to the purchase of goods and services. In Philadelphia, consumers pay sales tax on many transactions. This tax is typically added to the price of eligible items at the point of sale. Understanding the specific rates and what is subject to this tax can help consumers and businesses navigate their financial obligations in the city.

The Combined Sales Tax Rate

Philadelphia’s sales tax rate is a combination of the Pennsylvania state sales tax and an additional local sales tax. Pennsylvania imposes a statewide sales tax rate of 6 percent on taxable transactions. Philadelphia adds its own local sales tax of 2 percent.

This results in a combined sales tax rate of 8 percent that consumers pay on eligible purchases within Philadelphia. This additional local component makes Philadelphia unique compared to most other municipalities in Pennsylvania. The combined rate is remitted to the state, which then distributes the local portion back to Philadelphia.

What Goods and Services Are Taxed

Sales tax in Philadelphia generally applies to the retail sale, consumption, rental, or use of tangible personal property. This includes a wide array of items typically purchased by consumers, such as most retail merchandise, electronics, and furniture. Digital products, including streaming services and downloadable software, are also subject to sales tax in Pennsylvania.

While services are generally exempt from sales tax in Pennsylvania, certain specified services are taxable. Examples of these taxable services include specific repair services, cleaning services, and charges for hotel occupancy for periods less than 30 days. Admissions to entertainment events, such as concerts or sporting events, also typically incur sales tax.

Common Sales Tax Exemptions

Many common purchases are exempt from sales tax in Pennsylvania. Most food items purchased for home consumption are exempt from sales tax, though this generally excludes prepared foods like those found in restaurants or deli ready-to-eat sections. Candy and gum are also typically exempt from sales tax.

Another significant exemption covers most clothing items, making everyday apparel purchases tax-free. However, some exceptions exist for specific types of clothing, such as formal wear or certain accessories. Prescription medications and most over-the-counter medicines are also exempt from sales tax, as are many medical supplies.