If you sell items or provide services that aren't on this list, you may be exempt from the tax. Construction machinery and equipment exemption.In order to pay City taxes, you need a Philadelphia Tax Identification Number (PHTIN). The state sales tax rate is 6 percent, although some goods and services are exempt. The Employee Earnings Tax is a tax on salaries, wages, commissions, and other compensation paid to an individual who works or lives in Philadelphia. The analysis found that Philadelphia's overall effective tax rate is lowest on lowincome households that own their homes. You must give Form NJ-W4 to your employees to fill out and return to you. This form tells you how to withhold tax from your employee's pay. A Philadelphia resident with taxable income who works for an outofstate employer that doesn't withhold the Wage Tax from their paycheck. Since 2015, Philadelphia has used a single sales factor to apportion the business income of BIRT taxpayers.