Pennsylvania Sales Tax Sourcing Changes for Philadelphia and Allegheny County

Overview

Pennsylvania’s General Assembly passed legislation (Act 21 of 2026) requiring vendors selling taxable products or services to customers in Philadelphia and Allegheny counties to collect and remit local sales taxes. In addition to collecting and remitting the state’s 6% sales tax, vendors will now be required to collect and remit Philadelphia’s 2% local sales tax and Allegheny County’s 1% local sales tax on taxable sales to customers in those respective counties.

What Changed

• Prior to this change, local sales tax was based on point of sale (location of vendor).
• Local sales tax is now based on point of destination (where delivered), which aligns with Pennsylvania’s sales tax administration.

Note, Pennsylvania sales tax and use tax rules have not changed. State sales tax must be collected on taxable sales of goods and services. If sales tax is not collected when purchased, the purchaser may still owe use tax when taxable goods or services are used in Philadelphia or in Allegheny County.

Applicability Date

This legislative change was enacted on July 12, 2026, and applies retroactively to tax years after December 31, 2025. The Department of Revenue will begin enforcing these new rules on October 1, 2026.

For more information, please contact Stacy Dean from the State and Local Tax Practice. For technical interpretation or firm policy matters, please contact Stacy Ip-Mo from our Washington National Tax Practice.