July 1, 2019 Updates to Philadelphia Wage Tax and New Jersey Minimum Wage

July 1, 2019, brings changes to the paychecks of employees in the city of Philadelphia and the state of New Jersey.

Philadelphia Wage Tax

In Philadelphia, city residents and employees who live outside city limits but whose companies are located in Philadelphia will see a reduction in the Philadelphia City Wage Tax.

The Philadelphia Wage Tax affects all businesses that operate within the city as well as businesses outside of the city who hire Philadelphia residents.

Any paycheck issued with a pay date after June 30, 2019, must withhold the Philadelphia City Wage Tax at these new rates:

  • The new Wage Tax rate for residents of Philadelphia is 3.8712% (.038712).
  • The new Wage Tax rate for non-residents of Philadelphia who are subject to the Philadelphia City Wage Tax is 3.4481% (.034481).

If you are a Philadelphia-based business who does not collect the Wage Tax on behalf of your employees, or if you work for a business in Philadelphia and do not have the Wage Tax collected on your behalf, you – the employee – are responsible for paying an Earnings Tax directly to the City of Philadelphia. These rates will also lower as of July 1, 2019:

  • 3.8712% (.038712) for Philadelphia residents
  • 3.4481% (.034481) for non-residents

New Jersey Minimum Wage

On July 1, 2019, New Jersey will start a path to increase the state minimum hourly wage from $8.85 to $15.00 by the year 2024. This will be accomplished according to a timeline of steady, incremental increases. The amount of these increases differs according to the business category, to allow for implementation without a negative impact on the business. What this means is while most employers will be required to pay a new minimum hourly wage of $10.00 with annual increases of $1.00 for the following five years to reach $15.00 per hour, businesses deemed as “Seasonal & Small Employers” with fewer than six employees and “Agricultural Employers” will increase the minimum hourly wages they pay on a different scale. A full explanation is provided via this chart.

Workers who receive tips on top of their wages will see their hourly rates rise from the current $2.13 per hour to $5.13 per hour by January 2, 2022. Their cash wage tips must equal the minimum wage.

We are happy to answer any questions you might have regarding these updates or any other issue related to your payroll. Call 215-723-4881 or contact us online.