Charge local tax based on where the order is delivered
Under Pennsylvania Act 21 of 2026, local sales tax for Philadelphia and Allegheny County is based on the destination of a taxable product or service, not the seller’s office, warehouse, or point of sale.
The combined rates are:
- Philadelphia: 6% state sales tax plus 2% local tax, for a total of 8%.
- Allegheny County: 6% state sales tax plus 1% local tax, for a total of 7%.
The change does not increase the rates. It changes which local rate applies to a sale. If you deliver a taxable product to a Philadelphia address, for example, you may need to collect Philadelphia’s 2% local tax even if your business is located elsewhere.
The Pennsylvania Department of Revenue says the law was enacted on July 12, 2026, and applies retroactively to tax years after December 31, 2025. The department delayed enforcement until October 1, 2026, to give vendors time to update their systems. That enforcement delay is not the same as a later legal effective date. Review covered transactions from 2026 and get support from the Department or an appropriately qualified professional if you need to determine how to correct earlier returns.
See the Pennsylvania Department of Revenue’s local sales tax guidance and the City of Philadelphia’s explanation of the change.
Check whether your sales are in scope
This change applies to vendors already required to collect and remit Pennsylvania’s 6% state sales tax. It does not make every sale taxable, nor does it change which products or services are subject to tax. Pennsylvania’s existing rules for taxable goods and services still apply.
If you are a UK or other international seller registered to collect Pennsylvania sales tax, review the sales you make to customers in these counties. This may include orders through a Shopify or WooCommerce store, as well as direct sales alongside marketplace activity.
For marketplace orders, do not assume the platform handles every sales tax responsibility. Marketplace facilitators may collect and remit tax on sales they facilitate, but the seller’s own website sales and transactions outside that arrangement may remain the seller’s responsibility. Check platform tax settings and transaction reports so you can distinguish marketplace-collected sales from sales you need to report.
Update your checkout and tax engine
A tax setup that applies a flat 6% rate to every Pennsylvania order may now produce incorrect results. Review your checkout, tax engine, invoices, and accounting records to ensure local tax is calculated from the delivery address.
Use this checklist:
- Enable destination-based local sourcing. Apply the Philadelphia 2% local rate or Allegheny County 1% local rate when the taxable order is delivered to the relevant county.
- Keep state and local amounts distinguishable. Clear tax records make it easier to reconcile collections and prepare Pennsylvania returns.
- Test representative orders. Check addresses in both counties, nearby areas outside them, and orders involving marketplace collection. Confirm that checkout displays the expected tax.
- Review tax already charged. Identify whether you undercollected local tax or charged a local rate where it did not apply. Correcting tax settings now can prevent the same error from continuing.
Do not assume a five-digit ZIP code always identifies a county accurately. ZIP code boundaries can cross county lines. Pennsylvania’s Department of Revenue points vendors to tools such as the USPS Address Information System (AIS) Viewer and United States ZIP Codes. Use address-level verification where possible, and check whether your tax provider can resolve county boundaries reliably.
Review 2026 transactions and filing records
The retroactive application means you should not review only orders placed after October 1. Pull Pennsylvania transaction data for the relevant period beginning January 1, 2026, and identify taxable deliveries to Philadelphia and Allegheny County.
Compare what you should have collected with what your system actually charged. Keep a record of your method, the transactions reviewed, and any adjustments made. If you identify a shortfall or overcollection, confirm the correct reporting and correction process with the Pennsylvania Department of Revenue. Vendors remit the local tax to the Commonwealth through the Department of Revenue, not directly to the City of Philadelphia.
Pennsylvania’s sales and use tax information also explains that existing state and local use tax rules remain unchanged. If sales tax is not collected on a taxable purchase, the purchaser may still owe use tax when the item or service is used in Pennsylvania.
For UK businesses managing U.S. filings alongside UK records, consistent ecommerce bookkeeping can make this review more manageable. Whether you use Shopify, Amazon, or multiple channels, reconcile order, delivery, tax, and marketplace settlement data so your sales tax filings reflect what happened. Businesses searching for an ecommerce accountant UK or an Amazon seller accountant UK may also want to ensure their provider can organize U.S. sales tax records alongside UK compliance. Good Shopify accounting UK processes and accurate ecommerce bookkeeping UK records support a clearer audit trail, but do not replace U.S. registration, collection, and filing obligations.
Keep the compliance process moving
Act 21 does not change the underlying sales tax obligation for taxable sales. It changes how local tax is sourced in two Pennsylvania counties. If you are already registered for Pennsylvania sales tax, update your destination-based calculations, verify customer locations, and review 2026 transactions for possible corrections.
We support businesses with structured, ongoing accounting and compliance processes, including bookkeeping and tax filing coordination. If you need help organizing your cross-border records and compliance workflow, Talk to an expert.
Frequently asked questions
Does Pennsylvania’s change make more products taxable?
No. The Department of Revenue says the change does not alter which items or services are taxable. It changes where the local tax applies.
Do I charge Philadelphia tax if my warehouse is in Philadelphia but the customer is elsewhere?
The new rule uses the delivery destination. A Philadelphia warehouse location alone does not determine whether Philadelphia’s local tax applies to an order delivered outside the city.