How Philadelphia’s Homestead Exemption Affects Residential Property Taxes
Change in value of exemption reflected in tax year 2025 assessments
Philadelphians examining their residential property reappraisals this fall are noticing the impact of recent changes that have resulted in certain homeowners paying higher effective tax rates than two years ago—in large part because of higher assessed values—while a small number of owners saw a decrease in assessed value. In addition, the balance of revenue the city received from residential and nonresidential property taxes has tilted somewhat toward residential taxpayers in recent years.
In 2022, The Pew Charitable Trusts examined the city’s real estate tax in the report “How Property Is Taxed in Philadelphia.” The tax, the city’s second-largest source of locally generated revenue behind the wage tax, raised a projected $826 million for city government in fiscal year 2024, which amounts to 14% of the general fund, and $1.08 billion for the public schools.
Since publication of the 2022 report, there have been several key developments. The city conducted its first comprehensive property reassessment since 2022 and released the results in August 2024. And in June, City Council approved an increase in the value of the homestead exemption from $80,000 to $100,000; the exemption, the city’s largest residential tax assistance program, reduces the taxable value of all owner-occupied residences. The nominal tax rate, 1.3998%, did not change.
City Council, working with the mayoral administration, established a tax freeze program for qualified low-income residents in 2024.
These changes altered the portrayal in the 2022 report. For example:
- The effective tax rate—the tax that owners owe divided by the assessed value of their property—paid by owners of low-value homes rose on average since 2022, because the increase in their assessed values outpaced the rise in the value of the homestead exemption. In the 2022 report, low-value homes were assessed at a median of $107,900, which rose to $146,800 by this year.
- The percentage of all Philadelphia property tax obligations falling on residential taxpayers increased from 71% to 75%, while the share falling on nonresidential properties dropped from 29% to 25%. Nonresidential properties include commercial and industrial buildings as well as vacant land. The share in the commercial category fell from 24% to 18%, possibly the result of stagnation in commercial property values because of the rise in remote work.
- The city projects $925 million in property tax revenues in fiscal year 2025—a 12% increase over fiscal 2024.
The 2022 report showed that the homestead exemption can have a notable impact on the amount that people pay in property taxes—particularly for homes with the lowest values. For example, a property worth $100,000 in 2024 would pay zero taxes to the city, representing a savings of nearly $1,400 for the homeowner. The exemption also reduces the effective tax rate for higher-value homes, but to a lesser extent. (See Table 1.)
Table 1
How the Homestead Exemption Impacts Effective Property Tax Rates in Philadelphia, 2025
Calculations for four single-family homes, with and without the exemption
| Sample single-family homes | Assessed value | - | Exempted value | = | Taxable value | x | Nominal tax rate | = | Tax due | Effective tax rate |
|---|---|---|---|---|---|---|---|---|---|---|
| Low-value home with exemption | $146,800 | $100,000 | $46,800 | 1.3998% | $655 | 0.4462% | ||||
| Median-value home, no exemptions | $215,900 | $0 | $215,900 | 1.3998% | $3,022 | 1.3998% | ||||
| Median-value home with exemption | $237,300 | $100,000 | $137,300 | 1.3998% | $1,922 | 0.8099% | ||||
| High-value home with exemption | $453,700 | $100,000 | $353,700 | 1.3998% | $4,951 | 1.091% |
|
Notes: The low-value home represents the 25th percentile in assessments for 2025. The high-value home represents homes at the 90th percentile for 2025. The effective tax rate is the tax due divided by the assessed value. The “median-value home, no exemptions” category includes both owner-occupied homes without a homestead exemption (but that are eligible to receive it) as well as single-family homes not eligible for the exemption because they are not owner-occupied. Source: Pew calculations based on preliminary data downloaded from OpenDataPhilly on Aug. 8, 2024, and the fiscal 2025 homestead and tax rates. The median value of homes with an exemption was provided by the city. |
Since Pew performed its initial analysis in 2022—based on data from the Office of Property Assessment (OPA), the agency responsible for the assessments—the effective tax rate of low-value homes with a homestead exemption has increased markedly. That rate changed little for median- and high-value homes. (See Table 2.) Because the exemption is applied uniformly, this difference in effective tax rate increases between low-value homes, on one hand, and median- and high-value homes, on the other, had to come from increases in values among low-value homes. The hike in the homestead exemption was not enough to offset these increases, even though the effective tax rate of the low-value homes remains much lower overall than that of higher-valued properties.
Table 2
Effective Property Tax Rates Differ With Homestead Exemption, Depending on Value
Comparison of rates in tax years 2023 and 2025
| Effective tax rate by year | 2023 | 2025 |
|---|---|---|
| Low-value home with exemption | 0.36% | 0.44% |
| Median-value home with exemption | 0.75% | 0.81% |
| High-value home with exemption | 1.10% | 1.09% |
| Source: Pew calculations based on preliminary data downloaded from OpenDataPhilly on Aug. 8, 2024, and the fiscal 2025 homestead and tax rates. |
Table 3 shows the residential and nonresidential breakdown of property in the city in 2024. Since the 2022 Pew report, there has been a significant increase in the percentage of the city’s taxable value represented by residential parcels—from 71% to 75%—with the share represented by single-family homes rising from 47% to 52%. And there has been a corresponding decline in the taxable value of nonresidential parcels, particularly those designated as commercial. Nonresidential parcels dropped from 29% of the city’s taxable value to 25%; commercial parcels fell from 24% to 18%. This means that more of the burden of property taxes fell on residential rather than nonresidential owners.
Table 3
A Shift in the Value of Philadelphia’s Assessments Toward Residential Properties
Dollar values in billions, 2021 and 2024
| 2021 | ||||
|---|---|---|---|---|
| Property type | Properties | Assessed value | Taxable value | Percentage of taxable value |
| Residential | 503,567 | $105.3 | $82.5 | 71% |
| Single-family homes | 429,205 | $69.0 | $54.6 | 47% |
| Condo units | 32,371 | $11.0 | $9.0 | 8% |
| Apartment buildings | 41,991 | $25.2 | $18.9 | 16% |
| Nonresidential | 77,889 | $64.7 | $32.9 | 29% |
| Commercial | 28,924 | $55.6 | $27.2 | 24% |
| Industrial | 4,354 | $4.5 | $3.6 | 3% |
| Vacant land | 44,611 | $4.5 | $2.2 | 2% |
| Total | 581,456 | $170.0 | $115.4 | 100% |
| 2024 | ||||
|---|---|---|---|---|
| Property type | Properties | Assessed value | Taxable value | Percentage of taxable value |
| Residential | 501,058 | $155.4 | $115.2 | 75% |
| Single-family homes | 424,591 | $107.5 | $79.0 | 52% |
| Condo units | 34,310 | $12.7 | $10.6 | 7% |
| Apartment buildings | 42,157 | $35.2 | $25.6 | 17% |
| Nonresidential | 72,826 | $50.0 | $37.5 | 25% |
| Commercial | 23,624 | $33.1 | $27.3 | 18% |
| Industrial | 3,829 | $6.1 | $5.4 | 4% |
| Vacant land | 45,373 | $10.8 | $4.9 | 3% |
| Total | 573,884 | $205.0 | $153.0 | 100% |
|
Note: Not all properties are included in this analysis because of missing parcel category descriptions, and the analysis includes only properties with a 2024 assessment. The city reports that the 2024 property count is 583,779. Totals may not add up precisely because of rounding. Sources: Pew calculations based on preliminary data downloaded from OpenDataPhilly on Aug. 8, 2024, and the fiscal 2025 homestead and tax rates. The 2021 data comes from Pew analysis of data from the Office of Property Assessment and Department of Revenue. |
For fiscal 2025, the city anticipates taking in $925 million in real estate tax revenues, up from $826 million in fiscal 2024, while real estate taxes designated for the school district would be $1.12 billion, up from $1.08 billion. Because City Council kept the tax rate unchanged, these increases are the result of higher assessments.
Property owners can make a First Level Appeal with the Office of Property Assessment by Nov. 18, 2024, and appeals to the Board of Revisions of Taxes were due on Oct. 7. Property tax bills are due to the city in March 2025.
Katie Martin is a project director and Jun Phue is an associate with The Pew Charitable Trusts’ Philadelphia research and policy initiative.
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