Pittsburgh Council Proposes 2% Unearned Income Tax

Councilwoman Barb Warwick seeks to balance the city budget through a new levy on capital gains, dividends, and other passive income.

Updated on Oct. 26, 2026 in Taxes

Bold flat-color editorial illustration of a stylized concrete civic building facade, representing municipal policy and structural urban finance. — Pittsburgh Councilwoman Barb Warwick has proposed a new 2% city tax on unearned income streams like capital gains to help stabilize municipal finances. AI Illustration. Upload story photo >

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Councilwoman Barb Warwick is set to introduce a proposal for a 2% city tax on unearned income sources including capital gains, dividends, and rents. The measure aims to address significant financial deficits as the city prepares for its 2027 fiscal year.

Why it matters

The proposal seeks to shift the local tax burden by targeting passive income streams, aiming to generate $51 million in annual revenue to stabilize the municipal operating budget. This initiative comes as officials search for ways to mitigate reliance on city reserves.

The proposed 2% tax would apply to capital gains, dividends, and royalties, but explicitly exempts retirement income and pensions. Projections suggest the bottom 80% of earners would pay an average of $20 per year under the new levy.

The players

Barb Warwick

She is a Pittsburgh City Councilwoman who is spearheading this legislative effort to address local budget deficits.

Keystone Research Center

This is a Harrisburg-based research organization that provides economic policy analysis and tax impact studies.

The details

The tax would apply to various passive income streams including patents, copyrights, estates, and trusts. Currently, Pittsburgh's proposed 2027 operating budget totals $728 million, a plan that relies on $27 million in reserve funding to cover projected gaps.

The Keystone Research Center published its tax estimate report on Monday.
Councilwoman Warwick plans to introduce the tax proposal this Tuesday.
The new tax would affect the city's 2027 fiscal year and budget cycle.
Pittsburgh must pass its 2027 operating budget by the end of 2026.

Market Dynamics

This proposal mirrors broader debates in municipal finance regarding tax equity and the sustainability of relying on reserve funds versus new revenue streams. It follows a pattern set by cities looking to mitigate long-term structural deficits in their annual operating budgets.

Residents with passive income streams like dividends or rental property will face a new 2% tax obligation if the proposal passes. Conversely, the city estimates that the bottom 80% of earners will see an average annual impact of only $20, potentially shielding lower-income households from significant new burdens.

The takeaway

The proposal highlights the difficult balancing act between maintaining city services and restructuring local tax burdens. Residents should monitor upcoming council sessions to see how this potential change might interact with state-level tax obligations.