Unearned income in Philly is subject to the School Income Tax

If you live in Philadelphia and receive unearned income, such as dividends from stocks, you must file and pay the City's School Income Tax (SIT). The tax is due on April 15, the same as the deadline for filing and paying your personal income tax. The current SIT rate is 3.75%. Keep reading to learn more about this City tax.

Does the SIT apply to me?

Only Philadelphia residents are subject to the School Income Tax. If you live in the city and have unearned income, you must file and pay this tax, and do so on time, to avoid extra charges.

The SIT has been on the books since 1967. The School District of Philadelphia receives all revenue collected through this tax. In Fiscal Year 2023, local public schools received more than $60 million from the School Income Tax.

Often, taxpayers confuse the School District portion of the Real Estate Tax with School Income Tax, believing that by paying their property taxes, they have paid the SIT. While 55% of your property tax payments go to Philly's public schools, the SIT is a completely separate tax.

What is unearned income?

The SIT is based on unearned income, such as:

• Dividends
• Royalties
• S-Corp distributions
• Gambling winnings, including Pennsylvania Lottery cash winnings
• Some types of interest
• Capital Gains from the sale of property (including stocks and bonds) held for less than 6 months.

You owe the School Income Tax if you receive money from any of these sources and it's due on April 15 each year. Savings or checking account interest is not subject to School Income Tax. Government bonds are also exempt from the School Income Tax.

File and pay online

The Department of Revenue no longer mails payment vouchers and pre-filled SIT returns in the mail. But you must still file and pay the SIT. You can easily file and pay on the Philadelphia Tax Center.

Although paper versions of the SIT forms are available on the Department of Revenue's website, submitting your returns online is always best. The process is fast, easy, and secure. You don't need a username and password to pay this tax online, but you must log in to file your SIT return.

Visit tax-services.phila.gov and follow these steps to file electronically:

• Sign in to the Philadelphia Tax Center.
• Scroll to the summary subtab to find your SIT account.
• Choose "File, view, or amend returns" from the menu on the right. Follow the prompts to submit your

Follow these steps to pay online:

• Find the "Payments" panel on the right side of the Philadelphia Tax Center's
• Select your preferred payment method and follow the prompts to submit your payment. When you use an eCheck for payment, you are not charged any processing fees, but if you use a debit or credit card, you will be charged a fee.

While you don't need a username and password to pay taxes on the Philadelphia Tax Center, you must sign in to file returns. If you haven't done so already, visit the Tax Center now to create a username and passwordand request your verification letter. You must verify your identity to be granted access to existing tax accounts if using the Tax Center for the first time.

You can also use tax preparation software approved by the Department of Revenue to file the School Income Tax returns electronically. You can access the SIT regulations on our website.

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