Philadelphia contractor licenses, permits and city taxes

Pennsylvania registers home improvement contractors at the state level and leaves plumbing and electrical licensing to cities. Philadelphia uses that room fully. The facts below come from the city's own offices as read in October 2026. This is general information and not legal advice, so confirm fees and forms with the Department of Licenses and Inspections (L&I) and the Department of Revenue before you file.

Which rules belong to the state and which to Philadelphia

The state side is on our Pennsylvania page and in the Pennsylvania contractor licenses guide: the Attorney General's home improvement registration at $5,000 a year of work, the three-day cancel right, pesticide certification and the 6% state sales tax. The city adds its own business license, two city taxes, a contractor license, trade licenses, building permits and dumpster licensing. A state registration does not replace any of these.

Start with the Commercial Activity License and a BIRT account

L&I says any person or legal entity doing business in Philadelphia needs a Commercial Activity License, including businesses located outside the city. It costs nothing and does not need renewing. To apply you need a federal EIN or Social Security number, a Business Income and Receipts Tax (BIRT) ID, and you must be current on all city taxes. The legal name must match your Philadelphia tax account exactly, and any trade name must appear on that account too. Applications go through the city's eCLIPSE system and are issued automatically online.

The BIRT is the tax behind that account. The Department of Revenue lists the 2025 tax year at 1.410 mills on gross receipts (about $1.41 per $1,000) and 5.71% of net income, with the return due April 15, 2026. The city says that starting with tax year 2025 there is no longer a $100,000 gross receipts exemption. A business outside Philadelphia is subject to BIRT once it has at least $100,000 of Philadelphia gross receipts in any 12-month period ending in the current year. Losses from 2022 onward can be carried forward up to 20 years.

The city Wage Tax reaches employees who live outside Philadelphia

If you hire a Philadelphia resident, or a nonresident who works for you in the city, you register with the Department of Revenue within 30 days and withhold the city Wage Tax. The rates effective July 1, 2026 are 3.735% for residents and 3.425% for nonresidents. How often you deposit depends on what you withhold: under $350 a month is quarterly, $350 to $16,000 a month is monthly, and $16,000 or more is semi-monthly or weekly.

Two routes: the city contractor license or the state home improvement registration

L&I gives contractors two paths, and which one applies depends on the building.

The $126 license (with a $20 application fee credited toward it) requires general liability of $500,000 per occurrence, automobile liability of $300,000, and workers' compensation of $100,000 per accident, $100,000 per employee and a $500,000 policy limit. Each named construction supervisor can work for only one company and needs an OSHA 30 certificate completed within five years of the application date. L&I reviews online applications within five business days. L&I also issues a separate Excavation Contractor License ($103 a year, with a $100,000 license bond and a named site safety manager) that applies to excavation services, so ask L&I whether your digging scope triggers it.

The city's registration page for state-registered firms still carries interim steps written during an outage of the Attorney General's registration system, and says registrations issued under them expire June 30, 2026. The Attorney General's own page says the online system has operated again since April 24, 2026. Ask L&I which steps apply to you now and do not rely on the interim instructions.

What needs a permit and what the city says does not

L&I requires a building permit to construct, enlarge, change the interior or exterior of, or demolish a structure, to change occupancy, and for major repairs beyond regular maintenance. Earth disturbance of 5,000 square feet or more and excavation more than five feet below adjacent grade are also covered. Zoning approval usually comes first, and a property on the Philadelphia Register of Historic Places needs Historical Commission approval before L&I will act.

L&I lists work that often needs no permit when the property is not on the historic register: regular maintenance, fences up to six feet, retaining walls up to two feet, replacing doors and windows in one- or two-family homes, interior finishes such as painting and cabinets, and detached sheds of 200 square feet or less. Permits that qualify as EZ permits need no plans. They include roof covering replacement, wall covering replacement, residential decks up to 216 square feet, retaining walls and window or door replacement with no size change, each issued to a standard that L&I can revoke if the work departs from it. Fees add a $3 city surcharge and a $4.50 state surcharge per permit, and a one- or two-family building permit carries a $25 filing fee.

Trade permits follow separate rules. Only a licensed electrical contractor may do electrical work, the electrical permit is not issued until the building permit is, and the fee is $25 per $1,000 of estimated electrical cost, from a $63 minimum to an $18,975 maximum. A licensed master plumber must oversee plumbing work, and connections to the water main or sewer need separate Philadelphia Water Department permits.

L&I will hold your permit if you owe taxes or lack insurance

The building permit page says no permit is released unless the contractor named on the project is current on all City of Philadelphia taxes and has current insurance on file with L&I. The contractor must be named before final permit payment is accepted. For a small firm this ties your BIRT and Wage Tax filings directly to your ability to work. A missed return can stop the next job at the permit counter.

Dumpsters carry a city license and a street permit

If you own or lease construction dumpsters for junk removal or cleanup jobs, L&I issues the construction dumpster license: $75 for every three dumpsters or fraction thereof, renewed yearly. Each dumpster gets an RFID medallion. Putting one on a street or sidewalk also needs a separate Right-of-Way Permit from the Streets Department. The dumpster license page does not cover hauling in your own truck, so ask 311 how the city treats that before you price a job.

Sales tax, digging notice and weather

Pennsylvania's Department of Revenue lists a 2% local rate in Philadelphia on top of the 6% state rate (our sales tax guide explains how it shows up on invoices), so taxable services such as lawn care and building cleaning and maintenance carry 8% inside the city. Pennsylvania's list of taxable services is set by state regulation (61 Pa. Code section 9.3), so confirm with the Department of Revenue how your own service is classified, pressure washing included. Before any digging, Pennsylvania's One Call law requires notice not less than three and not more than ten business days ahead through PA One Call (811), which the Public Utility Commission enforces.

NOAA's 1991 to 2020 normals for Philadelphia International Airport show 23.1 inches of snow and 44.11 inches of precipitation in an average year, roughly 30 days that reach 90 degrees F, and about 77 freezing nights. That supports a split year: sealing and exterior cleaning in the warm months, snow work and freeze damage repair in the cold ones.

What this means for your setup

Put your city registrations on one checklist: Commercial Activity License, BIRT, Wage Tax, contractor license or state registration, insurance certificate on file with L&I. A website that states your service area and registration route plainly answers the question homeowners ask before they hire. Pennsylvania is an all-party consent state for recorded calls, so read our guide on recording business calls before you switch on call recording.

Frequently asked questions