The Transit Benefit decreased to $130 on January 1, 2014. What will happen in 2015?
Action is needed now to raise the current pre-tax monthly level of the transit portion of the Commuter Benefit to the equal the level that is permitted for parking.
The transit portion of the Commuter Benefit is an employer-provided federal tax benefit that allows working families to save money on their daily commutes by paying for their transit expenses with pre-tax dollars. The benefit provides an incentive for commuters to use public transportation, which helps reduce traffic congestion, improve air quality, save energy and decrease our reliance on foreign fuel imports. It also saves businesses of all sizes critical dollars through a reduction in payroll taxes that are reinvested in our economy to create new jobs.
On January 1, 2013 when the American Taxpayer Relief Act of 2012 was signed into law, the maximum monthly excludable amount (“cap”) of the transit portion of the Commuter Benefit was restored to $245 per month, the same level as the benefit for parking. Employees who took full advantage of the maximum monthly cap via pre-tax payroll deductions saved over $1100 a year on their transit and vanpooling fares depending on their tax bracket. Employers saved approximately $225 annually per employee on FICA taxes.
Unfortunately, the increase in the transit portion of the Commuter Benefit was only temporary - it reverted to $130 on January 1, as Congress failed to enact new legislation to make the increase permanent or extend it for an additional period of time. In comparison, the monthly limit for the parking portion of the Commuter Benefit, which also increased to $245 in 2013, is a permanent part of the tax code and thanks to another automatic cost of living increase on January 1 is now $250. The disparity between the two benefits is higher than any previous years.
Furthermore, the decrease in the transit portion effectively increased taxes for employees that utilize the transit portion and their employers.
Legislation is pending in Congress to create permanent parity between the parking and transit/vanpool portions of the Commuter Benefit. In the House, H.R. 2288, the Commuter Parity Act was introduced by Congressman Michael Grimm (R-NY) and co-sponsored by Congressman Jim McGovern (D-MA), Congressman Peter King (R-NY) and Congressman Earl Blumenauer (D-OR). This legislation also increases the commuter bicycle benefit to $35 per month and permits the bicycle portion to be used for bicycle sharing. The Senate bill, S. 1116, the Commuter Benefits Equity Act, was introduced by Senator Charles Schumer (D-NY).
It is critical that you contact your members of Congress and tell them to support passage of this legislation as soon as possible, and ask them to sign up as co-sponsors for the bills. Securing the support of additional members of Congress is vital for passage of this legislation and cannot be done without your help.
Please act now and urge members of your Congressional delegation to work to ensure that any tax legislation considered in 2014 establishes permanent parity between the parking and transit portions of the Commuter Benefit and maintains the cost of living adjustments, employer tax benefits and the bicycle benefit.
Click here to see the Coalition's Statement to the House Ways and Means Committee on tax reform.