Governor Josh Shapiro signed Pennsylvania’s 2026-27 budget into law on July 12. Buried deep in the budget was a major change to how local sales tax is applied. Specifically, Senate Bill 146 adds Sections 8043 and 8044 to the Fiscal Code. Under these new provisions, local tax in Philadelphia and Allegheny County (the only two locations in Pennsylvania that have a local tax) apply using destination-based rules.
Before this change, local tax was applied based on the location of the seller and if the sale originated outside of Pennsylvania, the seller had no legal obligation at all to collect local tax. Now, tax is applied based on the location of the customer. The budget states that this change applies retroactive to January 1, 2026 and we are still awaiting clarifying guidance from the state Department of Revenue.
