May 27, 2026
Michaela Althouse/PhillyVoice
Mayor Cherelle Parker announced that city officials and hospitality industry leaders reached a tentative agreement on a proposal to increase the hotel tax in next year's budget.
City officials said they reached a tentative agreement with hospitality leaders to amend an increase to the hotel tax in next year’s budget.
Mayor Cherelle Parker initially proposed raising the tax rate by 2% starting in August. The revision announced Wednesday would reduce that hike to 0.6%, but it would levy a 6% tax on short-term rentals. City Council must pass a budget before July 1.
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If this updated proposal is approved, the increases would generate an additional $75 million over the next five years that would be allocated for homeless services and go toward fulfilling the mayor's goal of adding 1,000 shelter beds, Parker said.
“Addressing street homelessness in Philadelphia will require partnership, thoughtful policy and sustainable investment,” Parker said in a statement. “... This is an extraordinary proposed agreement and it furthers our mission of a safer, cleaner and greener city with access to economic opportunity for all.”
Guests who stay in a hotel or short-term rental currently are subject to taxes imposed by the city (8.5%) and state (7%), which total 15.5%. Under the new proposal, the city's hotel taxes would increase to 16.1% and short-term rental taxes would spike to 21.5%, said Leah Uko, spokesperson for Parker’s office.
The tentative agreement comes just weeks after representatives from hospitality and tourism organizations sent a letter of opposition to council members warning that the hike would cause Philadelphia to lose its competitive tourism advantage.
“This would be the first time the hotel tax funds a city service rather than an initiative directly tied to leveraging the economic competitiveness of our industry, setting a dangerous precedent for the City and the Commonwealth,” the group wrote in the May 5 letter. “We respectfully request that Council not move forward with Mayor Parker’s proposed hotel tax increase. At the same time, we remain committed to working in partnership with the City to identify and advance collaborative solutions to address street homelessness.”
Ed Grose, president and CEO of the Greater Philadelphia Hotel Association, said the decision to accept the revised terms of Parker's proposal "did not come lightly."
"We believe this additional tax has brought Philadelphia to the limit of what can reasonably be imposed on the hotel industry through additional taxation," he said in an email. "While we are committed to Philadelphia's success, that cannot mean continually increasing the tax burden on hotels and their guests, thus undermining our efforts to attract visitors and create jobs in the city."
