Philadelphia has rescinded two tax exemptions that will change filing and payment duties for owners, operators, and property managers. The $100,000 Business Income and Receipts Tax exemption will not apply to the 2025 tax year, and the annual $2,000 Use and Occupancy exemption will end January 1, 2026.
Policy change overview
City officials announced that Tax Year 2024 is the last year the $100,000 Business Income and Receipts Tax exemption can be used and that the U&O exemption will end on January 1, 2026. The administration cited a legal challenge as the reason for ending the gross-receipts exemption that had been in place since 2015. Both changes shift previously exempt entities into taxable status for the specified periods.
BIRT filing and tax credits
Businesses that previously fell under the $100,000 threshold will be required to file BIRT returns and pay any liabilities for the 2025 tax year, with filings occurring in 2026. The city permits a credit against the Net Profits Tax equal to 60% of what was paid on the net income portion of BIRT, which the announcement notes will offset part of the increased BIRT liabilities.
Use and Occupancy tax changes
The annual $2,000 U&O exemption ends January 1, 2026, and U&O liabilities are due on the 25th of every month. The city noted some taxpayers may qualify to file and pay the entire year in one payment, and it identified January 25, 2026, as the first monthly payment date that will occur without the exemption in place.
Operational impacts for property managers and owners
Owners and operators who managed properties under previously exempt thresholds will face new filing requirements and potential increases in tax bills that affect cash flow. Property managers will likely see higher administrative workloads for return preparation, payment scheduling, and coordination between owners and accounting teams. Monthly U&O liabilities may require adjustments to budgeting and rent collection timing for managed properties.
Recordkeeping and loss carryforwards
The city reiterated that net operating losses incurred in 2022 and after can be carried forward for 20 years to offset future profits. The announcement also indicated that taxpayers who did not file past returns or filed No Tax Liability forms will need to update or file returns to document losses. The city is holding in-person information sessions on July 24 and 29 at 5 p.m. ET and August 7 at 12 p.m. ET, with registration required.
The rollback of long-standing tax exemptions occurs alongside other administrative and regulatory adjustments that have reshaped rental housing operations in Philadelphia in recent years. Changes to filing thresholds, payment timing, and documentation requirements have increasingly shifted compliance responsibilities toward owners and property managers, even where no underlying operational activity has changed. At New Age Realty Group, we support investors by ensuring they remain up-to-date with the latest policy changes.