Legislation introduced by Sen. Frank Farry aimed at adjusting the distribution of local tax dollars was approved by the Senate Finance Committee. The bill, known as Senate Bill 527 or the Commuter Tax Fairness Act, seeks to modify Philadelphia’s City Wage Tax to be more equitable for non-residents. It proposes that earned income tax dollars should benefit the municipalities where non-residents live rather than where they work.
Sen. Farry has been advocating for this change since he first introduced the legislation in 2018 during his time in the Pennsylvania House of Representatives and has continued to push for it after being elected to the Senate. The proposal received bipartisan support when it passed the full Senate in a previous session.
Currently, Philadelphia imposes a city wage tax of 3.44% on salaries and other compensation paid to employees working for employers based in Philadelphia. This includes non-residents who may work remotely and never enter the city physically but are still required to pay this tax if their employer is located there. The bill aims to address this situation by aligning Philadelphia’s tax policies with those of other municipalities across Pennsylvania.
“This is about fairness,” stated Sen. Farry. “Communities should be able to keep the local tax dollars that belong to their residents. These funds help pay for critical services like police, fire protection, infrastructure and schools. Right now, suburban taxpayers are unfairly subsidizing the budget of Philadelphia where they don’t reside.”
The proposed legislation does not seek to stop Philadelphia from taxing commuters entirely but intends to redistribute a portion of these taxes back to commuters’ home municipalities, ensuring local governments have necessary resources.
