The transit commuter benefit is an employer provided federal tax benefit that allows working families to save money on their daily commute. It also saves businesses of all sizes critical dollars that can be reinvested to create new jobs, helps reduce traffic congestion, improves air quality, saves energy and enhances our national security.
The maximum monthly excludable amount (“cap”) of the transit portion of the commuter benefit was increased from $125 to $240 on January 1, 2013 when American Taxpayer Relief Act of 2012 was signed into law. This legislation included a provision that amended the tax code, retroactively, to January 1, 2012, and extended the cap increase through December 31, 2013. On January 8, the IRS (Rev. Proc. 2013-15) provided an adjustment for inflation of $5, leading to the current the maximum monthly cap for of $245 for 2013.
This means that employees who take full advantage of the new monthly cap via pre-tax payroll deductions can save over $1100 a year on their transit fares. Employers can save over $225 per employee on FICA taxes. This benefit works for everyone.
Unfortunately, the increase in the transit portion of the commuter benefit is only temporary -it will revert back to $125 on January 1, 2014 unless Congress enacts 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, is a permanent part of the tax code and could receive another automatic cost of living increase on January 1, 2014. Should this happen, the disparity between the two benefits could be higher than any previous years.
Prior to the end of this year, Congress will have an opportunity to keep the transit benefit at same level as parking on a permanent basis.
We need you to act now to urge members of your Congressional delegation to work to ensure that any tax legislation considered this year establishes permanent parity between the parking and transit portions of the commuter benefit. Please voice your support of the transit benefit by clicking the button to the right and sending a letter to your members of Congress.