Philadelphia’s small business community is experiencing significant changes, marked by new tax policies and enhanced support programs. These developments present both challenges and opportunities for local entrepreneurs.
Reinstatement of the Business Income and Receipts Tax (BIRT)
Starting with the 2025 tax year, over 50,000 small businesses, gig workers, and self-employed individuals in Philadelphia are once again subject to the city’s Business Income and Receipts Tax (BIRT). This change follows the expiration of exemptions that had been in place since 2014, which previously allowed businesses to exclude the first $100,000 in gross receipts and a portion of net income from taxation. The reinstatement of BIRT is expected to impose a significant financial and administrative burden on affected businesses. To assist, the city is offering free tax preparation services for businesses earning under $250,000. [Source: Axios]
Support Programs for Small Businesses
In response to these challenges, Philadelphia has introduced several initiatives to support small businesses:
The Catalyst Fund
The Philadelphia Small Business Catalyst Fund aims to accelerate the growth of small businesses and entrepreneurs across the city. Eligible businesses can receive grants of up to $50,000, based on demonstrated need, growth potential, and economic impact. To qualify, businesses must have generated under $2 million in revenue in 2025, be located in Philadelphia, and be up to date on city taxes. [Source: City of Philadelphia]
Entrepreneur Works
Entrepreneur Works is a nonprofit Community Development Financial Institution (CDFI) that provides financial assistance, including grants and loans, as well as business training and one-on-one guidance. Their mission is to empower underserved entrepreneurs facing barriers to capital, fostering growth and success within the small business community. [Source: Entrepreneur Works]
The Business Center
For over 25 years, The Business Center for Entrepreneurship & Social Enterprise (TBC) has offered educational and business programs to strengthen business formations in Northwest Philadelphia’s underserved business ecosystem. TBC provides business plan courses, coaching, and connections to help individuals start and sustain their operations. [Source: The Business Center]
Economic Trends and Outlook
Despite the challenges posed by new tax policies, Philadelphia’s small businesses have demonstrated resilience. In 2025, many businesses faced issues such as inflation, tariffs, and labor shortages but remained optimistic about the future. The city’s restaurant scene, for example, continued to thrive, with 93% of restaurants that were open in September 2024 still operational by September 2025. [Source: The Philadelphia Inquirer]
Additionally, entry-level wages in the Philadelphia metropolitan area increased by 26% between 2020 and 2025, averaging a 4.7% annual growth rate. This growth reflects a positive trend for early-career workers and suggests a strengthening local economy. [Source: Axios]
As Philadelphia’s business landscape evolves, staying informed about policy changes and available support programs is crucial for small business owners. Leveraging these resources can help navigate challenges and seize opportunities in the city’s dynamic economic environment.