Philadelphia multifamily investment guide

We have documented local taxes on wages in four states so far. Philadelphia’s is roughly double the largest of them.

The City of Philadelphia sets the Earnings Tax, effective July 1, 2026, at "3.735% for residents, and 3.425% for non-residents." The City describes it as "a tax on salaries, wages, commissions, and other compensation paid to a person who works or lives in Philadelphia," so the two limbs work as they do in St. Louis: living here taxes you wherever you work, and working here taxes you wherever you live.

Set that against the rest of the series. Louisville charges residents 2.2 percent. Cincinnati charges 1.8. St. Louis charges 1.0. Philadelphia charges 3.735, which is more than St. Louis and Cincinnati combined.³

On the county median household income of $61,953, the resident rate costs about $2,314 a year on our arithmetic. Median gross rent here is $1,397, so the wage tax alone consumes close to two months of rent annually, before any state or federal liability.²

There is one feature we have not seen anywhere else in this coverage, and it cuts the other way. The City provides a reduced rate of "1.5000% (0.015000) since Tax Year 2020" for individuals approved under Pennsylvania’s tax forgiveness program, claimed with the required documentation on the return. No other local wage tax we have examined is means-tested. Louisville, Cincinnati and St. Louis all apply a single flat rate regardless of income.²

That matters more here than it would elsewhere, because Philadelphia County poverty runs 19.7 percent. A meaningful share of the resident base may qualify for the reduced rate, which softens the burden at the bottom of the income distribution, which is precisely where a workforce housing rent roll sits. But it is claimed rather than automatic, it requires an approval and a filing, and take-up of programs of this kind is rarely complete. We would not assume a resident base is receiving it.¹²

The property tax side is comparatively modest. The City states the 2025 Real Estate Tax rate as "0.6159% (City) + 0.7839 (School District) = 1.3998% (total)," applied to the value assessed by the Office of Property Assessment. For an owner the local tax burden here is weighted toward the wage tax on the resident rather than the property tax on the asset, which is unusual and which shifts where the pressure lands: on the tenant’s ability to pay rather than on your expense line.

• Residents pay 3.735 percent, non-residents who work here 3.425 percent.
• More than St. Louis and Cincinnati combined.
• About $2,314 a year at the county median income, close to two months of rent.²
• A means-tested 1.5 percent rate exists for those approved under state tax forgiveness.

The local burden here sits on the tenant’s paycheck rather than on your expense line. That does not make it your problem less; it makes it your problem through the rent roll.

The household arithmetic here is the tightest we have encountered, and the two figures that define it point in opposite directions from what the house prices suggest.

Housing is not expensive to buy. Median home value in Philadelphia County is $243,100 against a median household income of $61,953, about 3.9 times income, in the same band as Hamilton County, Ohio at 3.3 and Jefferson County, Alabama at 3.6.²

But rent is heavy. Median gross rent is $1,397, absorbing about 27.1 percent of median household income on our arithmetic. That is a heavier burden than most of our coverage, though below the 35.9 percent we later measured in Bronx County and 30.6 percent in Miami-Fort Lauderdale, and above Richmond and Las Vegas at 25.5 percent, and it does not yet account for the 3.735 percent wage tax coming out of the same paycheck.²

And owning is barely more expensive than renting. Monthly owner cost with a mortgage is $1,620 against that $1,397 rent, a difference of just $223, the narrowest gap we have measured anywhere in this coverage.²

Put those together and the structural case for renting in Philadelphia is weak in the same way it was in Marion County, but from a much more strained starting point: a household at the median is paying more than a quarter of its income in rent to save two hundred dollars a month over ownership, on a house it could afford at under four times income. The barrier to buying here is the down payment and the credit, not the monthly carry.

The renter base is nonetheless large and stable. The county is 51.8 percent owner-occupied, so 48.2 percent of households rent, one of the deeper renter shares in our coverage, and 86.5 percent of residents were in the same house a year earlier.²

Supply is not the risk. The county permitted 3,366 units in 2025 against 764,829 units of stock, about 0.44 percent, and construction employment across the metro fell 0.4 percent. Population fell 1.8 percent to 1,574,281.¹²

Employment overall is stable and institutionally anchored. Total nonfarm reached 3,133,200, up 0.7 percent, with unemployment at 4.2 percent, up from 4.1 in June. Education and health services alone is 749,300 jobs, about 23.9 percent of all metro employment on our arithmetic, and grew 1.7 percent. Only trade, transportation and utilities at 0.9 percent, information at 3.3 and construction at 0.4 declined.¹

• Homes cost about 3.9 times median household income.²
• Rent takes 27.1 percent of income, the heaviest we have measured.²
• Owning costs only $223 a month more than renting, the narrowest gap measured.
• Education and health services is about 23.9 percent of all metro employment.¹

A household paying more than a quarter of its income in rent, to save two hundred dollars a month over a house it could afford at under four times income.