September 14, 2006

Business and Payroll Tax


During a meeting, a business client mentioned that she was trying to develop a budget for the next 12-months but she did not know what her tax rates or requirements were.  So, in addition to setting up a meeting with my small business CPA, I provided her with the following list.  These are the 2006 tax rates for the Federal, Pennsylvania, and Philadelphia government.

  • Federal Net Income tax is graduated from 10% to 25% depending on your income level
  • Pennsylvania Net Income tax is 3.07%
  • Philadelphia Net Income tax (also called the Business Privilege Tax) is 6.5%
  • Philadelphia Gross Receipts tax is 0.023%

Payroll tax usually refers to the money that an employer must withhold from the employee’s paycheck: federal income tax, plus one-half of the Social Security tax, and one-half of the Medicare tax.  In addition, the employer must match the money that is withhold from the employee’s check for federal taxes.  Together, the employer's and employee's shares of the Social Security and Medicare taxes are known as the FICA tax.  These are the tax rates:

  • Federal Social Security Tax 6.5%
  • Federal Medicare Tax is 1.4%
  • Federal Unemployment Tax is 6.2%
  • Pennsylvania Personal Income Tax is 3.07%
  • Philadelphia Wage Tax for Residents is 4.331%
  • Philadelphia Wage Tax for Non-Residents is 3.8197%

 If you need more information, please call my office or email me anytime.

Sharmil McKee


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