WEBINAR: Navigating Act 21’s 2026 Local Sales Tax Changes: The Who, What, When, Why, and How That We Know, That We Think, and That We Expect

Pennsylvania’s 2026-2027 Budget, Act 21 of 2026, made changes to the practical methodology for determining when vendors must collect and remit local sales tax on taxable sales delivered or performed in Philadelphia and Allegheny County. The Pennsylvania Department of Revenue guidance since the local sales tax adoptions in in the 1990s (Philly went from add-on of 1% to 2% in 2009), the local tax was applicable based on the location of the vendor. While implications were the local taxes would be temporary, not even the most optimistic believes that now. In order to keep it simple and relatively low-pain in implication, the tax was applicable based on the location of the vendor.

As nexus evolved into the robust market-based, economic nexus applicable throughout the nation, PA’s local sales taxes were not consistent with the nexus elsewhere in PA and the rest of the United States (many states that have a sales tax also have applicable local sales taxes), and so the legislature opted to bring the local sales tax nexus situs in alignment with Pennsylvania, as well as beyond our state borders.

Though completely turning the nexus policy on its ear, this change was seen as principally “a change in software programming,” and was legislated to be retroactively applicable to January 1, 2026! Vendors that are already required to collect Pennsylvania’s 6% state sales tax must also collect and remit the applicable local sales tax when taxable products or services are sold to customers in Philadelphia or Allegheny County: 2% local tax for Philadelphia and 1% local tax for Allegheny County. The key compliance change is a shift away from the prior “vendor-location/origin-based” practical approach for local tax collection and toward a customer destination / place-of-use methodology for local tax collection. Under the prior rule set, vendors located in Philadelphia or Allegheny County were required to collect the local tax, while vendors outside those jurisdictions generally could collect the local tax voluntarily but were not required to do so merely because the customer was located in the taxable jurisdiction.

We will discuss the law, the expected compliance requirements, the deadlines for implementation and application, and the numerous questions and concerns this presents to businesses, vendors, and practitioners.