Pittsburgh Proposes New 2% Tax on Unearned Income
The plan would tax passive income like dividends and capital gains to help bridge the city's 2027 budget shortfall.
Updated on Oct. 26, 2026 in Taxes
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Pittsburgh City Councilwoman Barb Warwick plans to introduce a proposal for a 2% tax on unearned income to help address the city's significant financial deficits. The tax would apply to various passive income streams for city residents, excluding retirement income and pensions.
Why it matters
The proposal aims to address budget gaps as the city moves toward a 2027 operating budget of $728 million, which currently relies on $27 million from reserves. This measure is intended to shift the local tax burden by targeting unearned income rather than just wages.
The proposed 2% tax on unearned income is projected to generate $51 million annually, while the bottom 80% of earners would see an average annual impact of $20. For context, low-income households earning less than $22,100 currently pay 15% of their income on combined state and local taxes.
The players
Barb Warwick
Pittsburgh City Councilwoman who is sponsoring the proposal for a new tax on unearned income.
Keystone Research Center
An independent research group that provided the economic projections regarding the tax proposal.
The details
The tax would apply to unearned income sources including capital gains, dividends, rents, royalties, patents, copyrights, estates, and trusts. Retirement income and pensions are exempt from this levy. If passed, the city would be required to establish an entirely new collection system to track and process these passive income streams.
Timeline
Monday: The Keystone Research Center published its report on the tax estimates.
Tuesday: Councilwoman Barb Warwick plans to formally introduce the proposal.
End of 2026: The deadline for the city to pass the 2027 operating budget.
2027: The city's upcoming fiscal year and budget cycle.
Money Landscape
The proposed tax emerges as Pittsburgh navigates a tight fiscal cycle, with the city needing to fund a $728 million operating budget. The move represents a departure from current funding models as the city works to reduce its reliance on reserve fund draws.
If you hold investments, rental properties, or royalty interests in Pittsburgh, this proposal could increase your annual tax obligations by applying a 2% rate to these income sources. Residents should discuss the potential impact of this tax on their specific portfolio with a qualified tax professional.
The takeaway
The proposed tax seeks to balance the municipal budget by taxing passive income rather than labor. Residents should monitor upcoming city council hearings regarding the 2027 budget to understand if and when this new levy might be enacted.
Further reading
For more information on local fiscal policies, see our guide to Taxes.
Source note: This article includes information reported by TribLIVE.
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