Important Pennsylvania Sales Tax Update for Philadelphia and Allegheny County

We want to make you aware of a recent Pennsylvania sales tax law change that may affect businesses selling taxable products or services to customers in Philadelphia and Allegheny counties.

Background

Under Act 21 of 2026, vendors that are already required to collect and remit Pennsylvania’s 6% state sales tax must also collect and remit the applicable local sales tax on taxable sales delivered to customers in these counties. This includes Philadelphia’s 2% local sales tax and Allegheny County’s 1% local sales tax.

The law was enacted on July 12, 2026, and applies retroactively to tax years beginning after December 31, 2025. While vendors should make every effort to begin collecting and remitting the applicable local sales taxes as soon as possible, the Pennsylvania Department of Revenue has indicated that enforcement of these new rules will not begin until October 1, 2026.

What has changed?

• Previously, local sales tax was generally based on the point of sale, meaning the vendor’s location.
• Going forward, local sales tax is based on the point of destination, meaning where the taxable product or service is delivered.
• This destination-based approach aligns local sales tax treatment with Pennsylvania’s state sales tax rules.

What has not changed?

• Pennsylvania state sales tax rules remain the same.
• Vendors must continue collecting state sales tax on taxable products and services when required.
• State and local use tax rules also remain unchanged. If sales tax is not collected at the time of purchase, purchasers may still owe use tax when taxable products or services are used in Philadelphia or Allegheny counties.

Recommended Action

If your business sells taxable products or services to customers in Philadelphia or Allegheny counties, we recommend reviewing your sales tax settings, invoicing process, point-of-sale system, and filing procedures to ensure local tax is being collected and remitted correctly before enforcement begins on October 1, 2026.

Contact Us

If you have any questions related to these changes, please contact us.