Commuter benefits compliance in Philadelphia

Meta description: Philadelphia employers with 50+ covered employees must offer pretax commuter benefits. Learn the threshold, penalties, and what Alice handles.

Target keywords: Philadelphia commuter benefits ordinance, Philly transit benefit law, Philadelphia pretax commuter, Philadelphia employer commuter compliance

Footnote stack: Eligibility, IRS limits, Trademarks, Tax & legal advice

Body

Philadelphia's Commuter Benefit Ordinance took effect December 31, 2022 and requires employers with 50 or more covered employees to offer a qualifying commuter benefit. A covered employee is anyone who worked an average of at least 30 hours per week in Philadelphia for the same employer over the previous 12 months.

What counts as compliance

Employers must offer one of two options: a pretax payroll election allowing employees to exclude up to the IRS monthly limit ($340 for transit and $340 for parking in 2026) from taxable wages, or an employer-paid transit/vanpool benefit equivalent in value. Government employers are excluded from the ordinance.

Penalties

The City gives non-compliant employers 30 days plus a written warning before fines begin. After that, daily penalties run between $150 and $300. Aggregate fines in the first year can reach $100,000 in egregious cases. Enforcement is handled by the Mayor's Office of Labor.

Why Philly hourly employers usually choose pretax

Restaurant groups, healthcare networks, universities, and retail chains around Center City and University City carry headcounts that easily clear the 50-employee threshold. A traditional pretax benefit administrator requires employees to estimate monthly spending and pre-fund their accounts, which doesn't fit hourly schedules where hours and earnings vary. Alice is structured for that workforce: there's no up-front employer cost, no manual open enrollment to manage, and no employee pre-funding required, only a small reserve deposit from the employer.

How Alice maps to the ordinance

Alice runs the §132(f) pretax election that satisfies Philadelphia's requirement. Eligible spending includes SEPTA passes (TransPass, TrailPass, Key Card refills), PATCO, NJ Transit fares used by commuters in the metro, vanpool, and qualified parking such as garages, lots, meters, and parking apps. Uber and Lyft rides are not eligible (vanpool services routed through TNCs are a narrow exception). Alice connects with 30+ payroll providers, including connections to ADP, UKG, Paylocity, Paycom, Paychex, Toast, and others. We'll get you onboarded in one call.

Philadelphia employers can reach sales@thisisalice.com or (929) 552-4625. Employees enrolled through their employer can contact support@thisisalice.com or (888) 431-4355.

For the full list of eligible commuter expenses, see "What parking and transit expenses are eligible?" at help.thisisalice.com/article/52. Eligibility is set by IRC §132(f). Figures shown are for the 2026 plan year and are set by the IRS. Limits are indexed annually; we update this article each November when the IRS issues the following year's Revenue Procedure. Trademarks, brands, and product names referenced in this article are the property of their respective owners. References are for descriptive purposes only and do not imply endorsement. Alice does not provide tax, legal, or financial advice. Consult your own tax preparer, lawyer, or financial advisor for guidance specific to your situation.