Entering Philadelphia Net Profit Tax (NPT) in ProConnect Tax

The Philadelphia Net Profits Tax (NPT) is a tax imposed by the City of Philadelphia on the net profits earned from the operation of a trade, business, profession, enterprise, or other activity.

This tax applies to:  

• Philadelphia residents, even if their business is conducted outside of Philadelphia.  
• Non-residents who conduct business within Philadelphia.  

Before you start:

• The NPT is separate from the net income portion of the Business Income & Receipts Tax (BIRT). However, a credit may be available on the NPT based on the amount of BIRT owed.
• Estimated tax payments for the current year are due in two installments: April 15th and June 15th, each equal to 25% of the prior year's NPT.  
• Taxpayers owing $5,000 or more for the NPT are required to pay electronically.  
• Low-income residents and non-residents who are eligible for Pennsylvania's Tax Forgiveness Program may qualify for a reduced NPT rate of 1.5%. To claim this reduced rate, a completed Pennsylvania Schedule SP must be attached to the NPT return.  
• Corporations and LLCs that have elected to be treated as corporations for federal tax purposes are exempt from the NPT.  
• The NPT considers federal income realized on a real estate sale, meaning the tax deferral benefits of IRC Section 1031 are generally not available for NPT purposes.  

To enter in ProConnect Tax:

Add Philadelphia taxes to your client:

1. Select your client.
2. In the Add a state return field, enter Pennsylvania.
3. Next to Pennsylvania, you should see a field to Add a city return.
4. Enter Philadelphia.
5. Philadelphia - NPT should auto populate.
6. Check the Select for E-File option.
   • For the Corporate and S-Corporate modules, you may need to check Philadelphia - BIRT instead.

Select your tax type:

Individual

1. Go to State & Local ⮕ Taxes ⮕ PA Cities Business Tax
2. In the Philadelphia Miscellaneous section, check the 2024 NPT (Philadelphia) option.
3. Scroll down to the Philadelphia NPT section.
4. Fill out all applicable information in the section.

Partnership

1. Go to State & Local ⮕ Other Forms ⮕ City of Philadelphia
2. Scroll down to the approproate sections(s) for your situation:
   • Worksheet A: Primarily for Philadelphia Residents.
   • Worksheet B: Primarily for Non-Residents.
   • Worksheet D: Reports corporate members' income potentially relevant to both BIRT and NPT calculations
   • Worksheet NR-3: Specifically for Non-Residents who need to allocate their net profits between Philadelphia and other locations.
3. Complete all relevant fields.
4. Scroll down to NPT - Payments and Credits.
5. Fill out all applicable fields in this section.

Corporate

1. Go to State & Local ⮕ Other Forms ⮕ PA Philadelphia BIRT
2. Scroll down to Payments and Credits.
3. Fill out all applicable fields in this section.

S-Corp

1. Go to State & Local ⮕ Other Forms ⮕ PA City of Philadelphia
2. Scroll down to Payments and Credits.
3. Fill out all applicable fields in this section.