HARRISBURG – Legislation sponsored by Sen. Frank Farry (R-6) to return local tax dollars to suburban communities was approved today by the Senate Finance Committee.
Senate Bill 527 – also known as the Commuter Tax Fairness Act – would make the Philadelphia’s City Wage Tax more equitable for non-residents and ensure that earned income tax dollars are returned to the municipalities where these non-residents live, not where they work.
Farry has championed this initiative since first introducing the legislation in 2018 while serving in the Pennsylvania House of Representatives and has reintroduced it each legislative session since being elected to the Senate. The bill passed the full Senate last session with bipartisan support.
Under current law, the city wage tax of 3.44% is imposed on salaries, wages, commissions and other compensation paid to employees working for a Philadelphia employer. Non-residents – even those who work remotely and never set foot in the city – are forced to pay the full Philadelphia City Wage Tax if their employer is based in the city. This bill would close this loophole and align Philadelphia’s tax treatment with all 2,560 municipalities in the commonwealth.
“This is about fairness,” Farry said. “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 legislation would not prevent Philadelphia from taxing commuters. Instead, it would return a portion of those taxes back to the commuters’ home municipalities, ensuring that local governments have the resources they need to serve their residents.
“This is a commonsense step toward equity and accountability,” Farry said. “The residents I represent deserve to see their tax dollars reinvested in their own neighborhoods – not lost to another jurisdiction.”
Senate Bill 527 now moves to the full Senate for consideration.
CONTACT: Nicole McGerry