Philadelphia Mayor Cherelle Parker's 2026 budget includes tax cuts, preparations for 2026
Mayor Cherelle Parker's newest budget for the city of Philadelphia cuts some taxes, expands programs in the School District of Philadelphia and the court system and sets the stage for the U.S.' 250th birthday celebrations happening in 2026.
The mayor spoke to a session of City Council at City Hall on Thursday and set the city's priorities for the 2026 fiscal year, which begins in July 2025.
What's in Cherelle Parker's 2026 budget for Philadelphia?
Mayor Parker's $6.7 billion budget cuts the city wage tax and Business Income and Receipts Tax (BIRT). She also aims to repeal the 1% Construction Impact Tax.
"It's a $6.7 billion budget brimming with vital investments for Philadelphians," Parker told councilmembers.
The real estate transfer tax, however, will increase. Parking meter rates in Center City and around it will increase by $1 per hour to support the School District of Philadelphia.
There are also infusions of more funding into the Riverview Wellness Center in Holmesburg (an additional $65 million), which has beds for people experiencing homelessness and in recovery from substance use disorder. Over $2 million will go toward the "Wellness Court" in Kensington to allow it to operate five days a week.
The court that opened in January 2025 gives people charged with summary offenses a fast track to be diverted into a treatment program instead of spending days or weeks in jail.
The budget would also allow another 15 schools to take part in the extended day/extended year pilot program, bringing the total to 40.
For Vision Zero, the city's pledge to reduce traffic deaths, the budget allocates $5 million. Critics say last year's budget only allocated $1 million to the project, but the Parker Administration contended that some "Vision Zero" programs were accounted for on other line items, like another $1.25 million allocated for "Speed Cushion & Traffic Calming Program" measures, plus "significant" money from the Bipartisan Infrastructure Law.
Another roughly $40 million will be earmarked for special events in 2026 to celebrate as the United States turns 250 years old. The increase brings the city's total commitment to the 2026 celebrsations to $100 million — that covers beautification, money for partnerships and safety.
"Philadelphia, the birthplace of democracy, is ready to welcome the world in 2026," Parker said. "We will engage every corner of Philadelphia — with meaningful investments, economic opportunities, and a spirit of celebration across every neighborhood.
At the same time, we'll ensure that the nation's birthplace and first World Heritage City takes center stage as we host a slate of major events that will elevate Philadelphia on the world stage."
Parker has previously highlighted her priorities, including plans like the "H.O.M.E. intiiative," to build, restore or rehabilitate 30,000 units of housing across the city. The budget includes borrowing $800 million in two $400 million installments to fund the initiative.
Councilmember Jamie Gauthier, who chairs council's Committee on Housing, Neighborhood Development and the Homeless, applauded the proposal.
"This proposal is our opportunity to correct course – to make sure those who need our help the most finally get their fair share," Gauthier said in a statement.
Parker's tax cuts explained
The fiscal year will resume the incremental reductions in the wage tax. For residents, wage tax will be reduced from 3.75% to 3.7% by Fiscal Year 2030 and for non-residents, the wage tax will decrease from 3.44% to 3.39% by Fiscal Year 2030.
Regarding BIRT, the gross receipts portion of the tax will be reduced to 0.1410% in the upcoming fiscal year and eliminated by fiscal year 2039. The net income portion of the tax will be reduced from 5.81% to 5.71% and cut to 2.8% by Fiscal Year 2039.
Concerns about Fiscal Year 2026 budget
The city has had an infusion of American Rescue Plan Act money over the past years, but the act does not fund the city for fiscal year 2026.
The city has also received $2.8 billion in federal grants for various programs — and officials in Parker's administration noted that any reduction in federal support could result in difficult choices about what services to offer and what areas to invest in with the dollars that remain.
Additionally, cuts to the federal workforce and grants for educational, research and medical institutions could reduce what the city makes from the wage tax.
"Eds and meds" and government employees contributed $1 billion in wage taxes in Fiscal Year 2024, amounting to 45% of the revenue collected — it goes to show how reliant our city is on our big institutions from Penn and Temple to Jefferson and more.
When can the budget be passed and what's next?
After Thursday's address, City Council will hold hearings with Parker's leadership team to learn more about what's in the budget.
There will also be a series of town hall meetings with the public to hear residents' priorities for the budget.
The budget has to pass by June 30.
Parker's first budget for fiscal year 2025 amounted to $6.37 billion.
This is a developing story and will be updated.
