Philadelphia’s small business community is experiencing a period of significant transformation, marked by new tax policies and enhanced support programs. These developments present both challenges and opportunities for local entrepreneurs.
Changes in 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 these taxes introduces a significant financial and administrative burden for many small business owners. To assist, the city is offering free tax preparation services for businesses earning under $250,000. Read more
Support Programs for Entrepreneurs
In response to these challenges, Philadelphia has introduced several initiatives to bolster small businesses:
- The Catalyst Fund: This program offers grants of up to $50,000 to small businesses with demonstrated need and growth potential. Eligible businesses must be located in Philadelphia, up to date on city taxes, and have generated under $2 million in revenue in 2025. Learn more
- Entrepreneur Works: As a nonprofit Community Development Financial Institution, Entrepreneur Works provides financial assistance, including loans and grants, along with business training and one-on-one guidance to underserved entrepreneurs. Discover more
- The Business Center: This organization offers educational programs and resources to help individuals start and sustain their businesses, including business plan courses and specialized accelerators. Find out more
Economic Trends and Outlook
Despite recent challenges, Philadelphia’s small businesses have shown 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 instance, has continued to thrive, with a significant number of establishments remaining operational and new ones opening. Additionally, entry-level wages in the Philadelphia metro area have seen a 26% increase between 2020 and 2025, indicating a strengthening job market. Read more
As Philadelphia’s business landscape evolves, staying informed about policy changes and available resources is crucial for entrepreneurs aiming to navigate these developments successfully.