Calgary to Philadelphia: Energy, Pennsylvania's Flat 3.07%, and the City Wage Tax

Philadelphia's refineries, its finance and insurance employers, and its infrastructure and construction sector recruit Calgary's engineers and finance professionals. The tax picture is a moderate cut: Alberta's combined top rate of about 48% becomes about 43.8% inside Philadelphia (state plus wage tax) or about 41% in the suburbs.

Key takeaways

• Alberta's roughly 48% top rate sets the departure tax. On a $300,000 unrealized gain, about $72,000.
• Pennsylvania's flat 3.07% plus Philadelphia's roughly 3.74% resident wage tax; suburbs charge about 1%.
• Pennsylvania exempts most retirement income after retirement age.
• Alberta's 5% GST becomes 8% sales tax in Philadelphia, 6% in the suburbs.
• Pennsylvania has an inheritance tax, not an estate tax.

The Alberta departure

Departure tax applies to non-registered investments, private company shares, crypto, and foreign property at fair market value on the departure date. Alberta real estate, RRSPs, TFSAs, and pensions are excluded. Report on Form T1243, list holdings on Form T1161 if the total exceeds $25,000, and post security under Form T1244 for illiquid assets. A Calgary corporation is deemed sold, loses CCPC status, and becomes a US controlled foreign corporation after the move; wind it up before you go. AHCIP ends on permanent departure.

Philadelphia's side

Pennsylvania's flat 3.07% state income tax; Philadelphia's Wage Tax of about 3.74% on residents (about 3.43% on non-residents who work in the city), which most suburbs replace with a 1% local earned income tax; 8% sales tax in Philadelphia (6% state plus 2% city), 6% in most suburbs; property tax near 1.4% effective; no estate tax, but Pennsylvania's inheritance tax applies at 4.5% to lineal heirs, 12% to siblings, and 15% to others, with a spousal exemption.

The RRSP in Pennsylvania

Federally deferred under Article XVIII of the treaty. Pennsylvania taxes eight classes of income rather than starting from federal AGI, and it does not tax the undistributed earnings of retirement plans, which supports deferral. Pennsylvania also exempts most retirement income received after retirement age, which can cover RRIF withdrawals; document the position in the first-year file. Canadian withholding is 25% on lump sums, 15% on periodic RRIF payments within the treaty limit, with a US foreign tax credit federally.

Who makes this move

Calgary process and chemical engineers to the Philadelphia refineries and chemical plants, Alberta finance professionals to Vanguard and the region's banks and insurers, and Calgary project managers to Philadelphia's infrastructure and construction employers.

Worked example

A Calgary process engineer moves to the Main Line on June 30 with $200,000 of unrealized gain in a non-registered account, $450,000 in an RRSP, and a Calgary home sold in the departure year.

• Departure tax. $200,000 gain, $100,000 taxable, at about 48%: roughly $48,000.
• Home. Sold as a resident under the principal residence exemption.
• RRSP. Federally deferred; Pennsylvania position documented.
• Main Line. State 3.07% plus 1% local; no city wage tax. Combined top rate about 41%. GST 5% becomes sales tax 6%.

Official sources

"When you leave Canada, you are considered to have sold certain types of property (even if you have not sold them) at their fair market value (FMV) and to have immediately reacquired them for the same amount. This is called a deemed disposition and you may have to report a capital gain (also known as departure tax)." — Canada Revenue Agency, Leaving Canada (emigrants), https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/individuals-leaving-entering-canada-non-residents/leaving-canada-emigrants.html

Pennsylvania personal income tax is levied at the rate of 3.07 percent. — Pennsylvania Department of Revenue, Personal Income Tax, https://www.pa.gov/en/agencies/revenue/resources/tax-types-and-information/personal-income-tax.html

The Philadelphia resident Wage Tax rate is "3.74000% on gross wages" for July 1, 2025 through June 30, 2026. — City of Philadelphia, Tax Rate History, https://www.phila.gov/departments/department-of-revenue/forms-documents/regulations-rulings/tax-rate-history/

Practitioner note

The Philadelphia decision that moves the most money is the city line: the wage tax is about 3.74% inside the city and about 1% in the suburbs. On a $200,000 salary that is roughly $5,500 a year. We run both before the client signs a lease.

See also: Weighing Florida instead? See the Canada-to-Florida guide, or the same city's Calgary to Miami guide.

Next step

Fairlight prepares the Alberta departure return, the corporate wind-up, and the first-year federal, Pennsylvania, and local returns for Philadelphia clients. See cross-border pricing or book a call.