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January 20, 2005 --
City Business Privilege Tax – Jobs Creation Tax
Credits
The City of Philadelphia
provides a job creation tax credit against business
privilege tax liability. The credit is available for a
period of five years from the date the taxpayer first files
for the credit by submitting a Job Creation Tax Credit
Certificate to the Department. The
amount of the credit is $1,000 per new job created, up to
the maximum credit specified in the commitment letter
received from the City. The credit is available for a period
of five years from the “start date” (defined as the date
a business begins creating new jobs that are eligible for
the credit), and may be recaptured in the event that the
taxpayer fails to create the required number of jobs, or
fails to maintain existing business operations, during the
five-year period.
To qualify for the credit, a
taxpayer must demonstrate that his/her business has the
ability to create at least 25 new jobs, or increase its
workforce by at least 20%, within the required five-year
period. The taxpayer must also demonstrate the business’
financial stability; the stability of the job creation
project; and show intent to maintain operations within
Philadelphia for a period of five years from the date the
taxpayer submits the business’ tax credit certificate to
the Philadelphia Department of Revenue. The taxpayer must
also affirm that the decision to expand or locate within
Philadelphia was due in large part to the availability of
the credit. A
“new job” is a full-time job, the average hourly rate
for which is at least 150% of the federal minimum wage. The
job must be created within the city and county of
Philadelphia within five years of the start date.
City Wage and Net Profits Tax
The new rates
for the City of Philadelphia wage and net
profits tax are as follows: Effective January 1, 2005 the
rate for Philadelphia residents is 4.331% and on January 1,
2006 it will decrease to 4.301%.
Effective January 1, 2005 the rate for nonresidents
is 3.8197% and on January 1, 2006 it will decrease to
3.7716%.
School District Net Income Tax
The Philadelphia School District net income tax rate is
4.3665% for 2005 and 2006.
For more information, contact an Asher
tax professional at
215-564-1900
.
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