Transit Credit Survives Cliff – QNS.com

Transit Credit Survives Cliff

Allows Workers To Deduct Fare Expenses

Sen. Charles E. Schumer announced the extension of the commuter mass transit tax benefit through 2013 as part of the final legislative package to thwart the “fiscal cliff” agreed upon on New Year’s Day, Tuesday, Jan. 1.

The provision will allow riders of mass transit to use up to $240 a month tax free to pay for their commutes.

“With commuting costs on the rise, many New Yorkers pay hundreds of dollars a month traveling to work alone,” said Schumer. “The last thing the people of New York needed was an extra burden on top of their monthly commuting fares. In a package that has some major flaws, the extension of the transit benefit-used by New Yorkers more than anyone else in the country-is a real victory that keeps more money in commuters’ pockets and give them some much-needed relief as they work to make ends meet.

In 2011, employees whose monthly mass transit fees were less than $230 were able to deduct the full amount of their commuting costs from their paychecks, tax free, through an employer benefit program. Until 2009, commuters who drove to work received a greater tax break than those who took mass transit. In 2009 the mass transit benefit was almost doubled from $120 per month to $230 per month, creating a savings of over $1,000 per year for commuters.

Currently, 500,000 commuters in the Greater New York Metropolitan Area, and 2.7 million commuters nationwide take advantage of the benefit. Schumer was able to have the benefit extended in 2011, but in yearend negotiations, Congress failed to include tax extenders in a year-end payroll tax cut deal.

Schumer authored the original legislation that passed as part of the economic stimulus package in 2009, that allowed employers to offer their employees up to $230 per month in transit benefits tax free, equal to what they were offering tax-free for parking costs. The transit benefit reduces a commuter’s transportation costs by a third or more.

Schumer announced that a $240 per month mass transit benefit, included in the recent fiscal cliff deal, will fully cover the monthly cost of riding all major mass transit systems in New York City, including subway, bus, and express bus, and will cover most of Metro North and Long Island Railroad commuting costs.

According to TransitCenter, in the New York metro area, commuters saved over $200 million in 2010 because of the transit benefit and employers have saved over $45 million since the benefit went into effect in the New York area. Approximately 15,000 companies in New York offer the transit benefit covering more than a half a million employees.

In 2010, employers nationwide saved about $300 million in payroll taxes, money that can be reinvested to create jobs, Schumer said.

More from Around New York