New Tax Implications in Pennsylvania Stormwater Fees Court Decision

The grate of the storm sewer after the rain. The water drains into the storm drain.

If you own property in Pennsylvania, in places such as Allentown, Bethlehem and Easton, you likely pay stormwater fees or “rain taxes” to your local municipality. These fees are charged to property owners in order to finance the costs of local stormwater programs. Generally, the amount of a stormwater fee is determined based on the individual property’s total impervious surface area, essentially every surface on your property that does not allow for water to infiltrate, such as buildings or concrete surfaces. A recent court decision has new implications for Pennsylvania stormwater fees – read on to see if this impacts you or your property.


On January 4, 2023, the Pennsylvania Commonwealth Court, in The Borough of West Chester v. Pennsylvania State System of Higher Education and West Chester University of Pennsylvania of the State System of Higher Education,[1] decided that the impervious surface area of a property does not directly correlate to the level of benefit accorded the owner of that property.

In other words, Pennsylvania stormwater charges are not fees for service, as they are not reasonably proportional to the value or benefit received in return for payment. These fees are instead used to subsidize ongoing stormwater programs and public projects. The Court opined that such projects provide benefits enjoyed not only by the specific property owners paying these fees but also by the general public. Thus, the Court held that stormwater charges are taxes, instead of just fees.


This decision has profound implications on both residential and commercial real estate. For example, if you are renting a property as either a commercial or residential tenant, or if you own property as a landlord, if your specific lease document states that you are responsible for all property taxes, this now likely includes any stormwater charges.

Nonprofit entities are also impacted by this decision. Specifically, because institutions of purely public charity are eligible for exemption from local and state-wide taxes in Pennsylvania, these entities would now also be exempt from stormwater charges.

In addition, the decision of this Court to hold that this charge is a tax may afford deduction opportunities to individual taxpayers.

[1] No. 260 M.D. 2018, 2023 WL 27942 (Pa. Commw. Ct. January 4, 2023). Note that as of the date of this article, this case is not reported and is unpublished. An Application to publish the Commonwealth Court’s Opinion was filed on February 1, 2023. The case was also appealed to the Pennsylvania Supreme Court on February 1, 2023. We will continue to publish updates on these changes as updates become available.

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