Philadelphia officers are bracing for what could possibly be a more-than-$100 million blow to town’s tax income resulting from pandemic-related distant work and job losses.
Hundreds of staff for city-based companies who stay within the suburbs and have been working from house in the course of the COVID-19 pandemic are entitled to a metropolis wage tax refund in spring of 2021. Non-residents make up about 40% of Philadelphia’s wage tax payers, the most important portion of town’s tax income.
Metropolis officers elevated the non-resident wage tax fee this yr from 3.4481% to three.5019% for fiscal yr 2021 to attempt to make up for among the anticipated income losses. However nonetheless they count on a 5% lower in income – or a $100 million hit to town’s coffers. The wage tax normally brings in about $2 billion yearly.
“Whether or not it’s wage reductions, diminished hours, diminished employment, we additionally included commuter’s not working within the metropolis and that being house,” stated metropolis price range director Marisa Waxman.
However the state board that oversees town’s funds worries that the hit could possibly be even larger that town is anticipating.
“All of it is dependent upon what number of file and the salaries of these people who file,” stated Harvey Rice, Government Director of the Pennsylvania Intergovernmental Cooperation Authority. “The upper the wage, the larger the refund.”
Among the metropolis’s largest firms have already stopped taking the non-resident wage tax out of workers’ paychecks, so officers warn that, earlier than folks apply for a refund, they test with their firm to see if that has already been taken care of.
Metropolis residents nonetheless need to pay their wage tax regardless of the place they have been working this yr.
However for these non-residents who’re eligible for a refund, a type should be crammed out in an effort to get the refund. That type just isn’t but on-line however might be discovered on this web page in early January, metropolis officers stated.
Filers ought to wait till they’ve their W-2s earlier than submitting.
Officers might be placing out steering for each employers and workers within the coming days, a metropolis spokeswoman stated.