Broad Street Brief Special Edition: Council Approves FY26 City Budget

On the evening of Thursday, June 5, the Philadelphia City Council granted preliminary approval to several bills related to Mayor Cherelle Parker’s $6.8 billion FY26 City Budget with minimal changes to the initial proposal, which prioritizes tax reform, housing, public safety, education, infrastructure, and essential City services without raising property taxes. With the 11th hour agreement reached, the Council remains on track to pass the budget finally during their last scheduled meeting before summer recess on Thursday, June 12. Highlights are included below.

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Tax Reform

Mayor Parker’s proposed timeline for reducing the Business Income & Receipts Tax (BIRT) and wage taxes was adopted without changes, reflecting alignment between her administration and the City Council on an unusually long-term tax policy. The plan includes phased reductions to the BIRT and wage tax rates, incentivizing business investment while maintaining near-term fiscal stability, as follows:

• Reduces the net income portion of BIRT by more than half to 2.8% within seven years of the pension fund reaching 100% funded status in FY33, with an immediate reduction of the net income portion from 5.81% to 5.71% in FY26.
• Eliminates the gross receipts portion of BIRT entirely over the same seven-year period, with an immediate reduction from 0.1415% to 0.141% in FY26.
• Reduces the wage tax for Philadelphia residents to 3.7% and for non-residents to 3.39% by FY30, with an immediate reduction from 3.75% to 3.74% for residents and 3.44% to 3.43% for non-residents in FY26.

The Council also approved the removal of a longstanding BIRT exemption for the first $100,000 in revenue, following legal concerns raised by a recent lawsuit. To support small businesses impacted by the change, the City allocated $47 million over two years for relief programs in an effort to ease the transition and balance economic development with legal and budgetary considerations.

HOME Initiative

The City Council approved an $800 million bond authorization to fund Mayor Parker’s Housing Opportunities Made Easy (HOME) Initiative, which would create or preserve 30,000 housing units. The final agreement includes enhanced Council oversight through a project review team with equal representation from the administration and Council and requires legislative approval for significant funding changes. Council will also receive quarterly updates on district-level spending. Additionally, the administration secured a provision to fast-track development on 1,000 city-owned parcels without the need for separate legislation.

City Council Housing Committee Chair Jamie Gauthier (District 3) and Vice Chair Rue Landau (At Large) emphasized that the investment is a response to Philadelphia’s urgent housing crisis, with a focus on supporting low-income residents and preserving affordable housing. They pledged to use the Council’s oversight role to ensure the funds strengthen proven programs and catalyze transformative, community-based solutions.

Safety, Streets & SEPTA

• $30 million for anti-violence grants
• $67 million for a new Forensics Science Center
• $350 million for street paving and ADA ramp installation
• $30 million over six years for Vision Zero
• $716 million for SEPTA operating support
• $76 million for SEPTA capital spending

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