Do you have Employees in Philadelphia?

Philadelphia, PA has joined the growing ranks of cities instituting commuter ordinances by passing a bill that requires Philadelphia employers to provide commuter benefits by 2023. The City Council of Philadelphia describes the positive effects of this commuter plan, including annual savings for commuters, reduced traffic congestion, reduced emissions, and increased ridership which will result in more funding to invest in public transportation infrastructure. The Southeastern Pennsylvania Transportation Authority (SEPTA) hopes to increase ridership which has been below average since the pandemic started. 

Effective December 31, 2022, the ordinance requires employers with 50 or more covered employees to offer a commuter benefit program. A covered employee is any person who works an average of 30 hours or more per week for compensation in Philadelphia for the same employer within the past 12 months.

Philadelphia employers must provide at least one of the following commuter benefits:

  1. Election of a pretax payroll deduction for a) fare instrument (e.g., fare card, pass, or token) or transportation in a commuter highway vehicle if such transportation is for travel between home and the workplace and meets certain requirements; or b) a qualified bicycle expense (purchase, maintenance, repair, and storage expenses relating to bicycle commuting); or
  2. An employer-paid benefit whereby the employer supplies a fare instrument for covered employees; or
  3. Any combination of the two.

Commuters can begin using the benefit in January 2023.  The new law will enable workers to use pretax income to cover commuting costs. Organizations that adopt a new commuter plan will also enjoy some financial benefits, as payroll taxes are reduced when employees put pre-tax funds into a commuter plan.

The city’s commuter benefit dollar amounts are the same as Federal commuter amounts, including adjustments for the cost of living. In 2022, the Federal law allows employees to use up to $280 per month in pretax dollars for commuter benefits. This amount will more than likely increase in 2023 due to the cost-of-living adjustments (COLAs), which will be published by the IRS later this year. Under federal law, the $20 monthly bicycle reimbursement benefit is currently taxable to the employee, however, the employer may deduct reimbursements to employees on its business tax return. 

Employers who fail to comply could face penalties. We expect that the Philadelphia city government agencies will provide compliance information and instructional materials in the near future.

If you are an employer who needs support administering commuter benefits, please reach out to TRI-AD.

To see other municipal mandatory commuter ordinances, click here.


TRI-AD and our Associates’ suggestions or recommendations shall not constitute legal advice. No content on our website can be construed as tax or legal advice, and TRI-AD may not be considered your legal counsel or tax advisor. Clients are encouraged to consult with their tax advisor and/or attorney to determine their legal rights, responsibilities, and liabilities. This includes the interpretation of any statute or regulation, federal, state, or local; and/or its application to the clients’ business activities.