Only a Proposal: What Pittsburgh City Council’s Unearned Income Tax Could Mean for You

By Brad Hilbert, Founder & President, 3 Rivers Wealth Management Group, Inc.

If you live in the City of Pittsburgh — or keep investments or rental property while living here — you may have seen headlines about a proposed new city tax. Here is the plain-English version of what City Council is considering, what it would cover, what it would not, and why it is still only a proposal.

What’s being proposed

Council Member Barb Warwick of Greenfield introduced Bill 2026-1052 on October 27, 2026. It would create a 2% tax on the “net unearned income” of people domiciled in the City of Pittsburgh. As written, it would take effect January 1, 2027. On November 2, Council’s Standing Committees voted to hold the bill for a public hearing. As of November 9, 2026, a specific hearing date has not been posted on the city’s schedule.

“Unearned income” means money that does not come from a paycheck — dividends (cash a company pays shareholders), capital gains (profit when you sell an investment or property for more than you paid), and net rental income (rent after reasonable expenses). The bill would also cover royalties and certain trust and estate distributions. Warwick and the Keystone Research Center estimate it could raise about $51 million a year.

What would be taxed — and what would not

Per the ordinance on the city’s Legistar system, City residents would face the tax on:

Dividends (including many mutual-fund dividends)
Net rentals after reasonable costs
Gains from selling real estate or personal property
Royalties, and trust or estate distributions to a City resident What would not be taxed: interest; retirement and pension payments; IRA and similar plan distributions; sick and disability benefits; insurance proceeds; and gifts and bequests. Traditional retirement accounts and pensions stay out. One gray area: the draft does not clearly exempt gains from selling a primary home — tax professionals have flagged that for clarification.

Who would pay

This would apply to City residents — people domiciled in Pittsburgh — not to corporations as such. Live in the City for only part of the year, and you would owe only on unearned income during that period. People outside the city limits generally would not owe this tax under the bill as written.

For context, most Pittsburgh School District residents already pay a combined 3% local earned income tax on wages in 2026. The proposal would sit on top of the wage-tax system for residents who also have taxable dividends, capital gains, or net rents.

The big legal question

Even supporters acknowledge a court challenge is likely. A 2024 City Solicitor opinion said Pittsburgh is “neither explicitly permitted to impose nor explicitly prohibited from imposing an unearned income tax,” and that authority “is not settled law.” Warwick has said a legal fight would almost certainly not be resolved in time to collect for 2027.

What this could mean for you

Retirees living in the City. IRA, 401(k)-style, pension, and similar distributions are excluded, as is interest. Taxable brokerage dividends or capital gains outside retirement accounts could be in scope if the ordinance passed as drafted.

Investors with taxable brokerage accounts in the City. Dividends and realized capital gains would be the main exposure. Unrealized gains — paper profits you have not sold — are not income until you sell.

Landlords and rental owners who live in the City. Net rental income would be taxable under the proposal, even if the rental sits outside Pittsburgh, because liability follows the resident’s domicile.

People who live outside the City. As written, this is a City-resident tax. Living in a suburb generally means you would not owe this levy — confirm unusual domicile situations with your tax professional.

What we’re watching

The public hearing date and any amendments (for example, an exemption for primary-residence sales).
A fresh Law Department opinion and any Act 511 or Uniformity Clause arguments.
Whether Council advances, revises, or shelves the bill during the 2027 budget process.
Clarifications on home-sale gains, partnership income, and S-corporation reporting.

Let’s talk before you react

This is a proposal, not a finished law. Do not rearrange accounts or sell investments solely because of a draft ordinance. If you have questions about how a Pittsburgh domicile, a taxable brokerage account, or rental property might interact with this idea, I am happy to walk through it with you and your CPA.

As always, you should contact your tax advisor with regard to any subject matter that might involve your personal tax circumstances.

Brad Hilbert, Founder & President

3 Rivers Wealth Management Group, Inc.

bradleyhilbert@trwmg.com · (724) 809-5918

trwmg.com

Disclosure

Investment advisory services provided by NewEdge Advisors, LLC and NewEdge Wealth, LLC, our SEC registered investment advisers. Securities offered through NewEdge Securities, LLC, Member FINRA/SIPC. NewEdge Advisors, LLC, and NewEdge Securities, LLC are wholly owned subsidiaries of NewEdge Capital Group, LLC.

This article is for informational purposes only and is not tax or legal advice.

Regulatory disclosures: https://www.newedgecapitalgroup.com/regulatory-disclosures/