Proposed pre-tax transit benefit changes for 2012
Last month, I wrote a blog post noting the possibility that the Internal Revenue Service (IRS) would reduce the dollar amount transit and vanpool riders can set aside pre-tax to cover their transportation expenses. According to information received from the Center for Transportation Research at the University of South Florida, the IRS is indeed reporting a scheduled 46 percent reduction in the maximum tax-free benefits allowed for transit and vanpool customers – even as the maximum tax-free limit for parking would actually increase by $10 in 2012.
Currently, transit and vanpool riders can set aside $230 per month to cover transportation costs; if Congress fails to act, this amount will roll back to the pre-stimulus level of $120 per month, plus a $5 per month adjustment for inflation, for a total of $125 per month. However, because parking’s tax-free limit was $230 per month prior to the stimulus package, it would not roll back, and in fact would receive a $10 increase for inflation for a total of $240 per month in 2012.
In metropolitan Chicago, this change would have the most impact on commuter rail (Metra and South Shore) monthly pass holders who make medium to long-distance trips. For example, the current monthly pass price for a trip between Chicago (Zone A) and Des Plaines (Zone D) is $102.60. With Metra’s proposed fare increase scheduled to take effect in February 2012, this monthly pass price would rise to $135.25. If Congress does not vote to maintain current transit and van pool pre-tax benefits, only $125 of the monthly pass would be covered by pre-tax dollars, and the remaining $10.25 would have to be paid with post-tax dollars.
Providing greater incentives for people to drive and park, rather than to take transit or participate in a vanpool sends the wrong message to commuters at a time when the public and private sectors in metropolitan Chicago are working together to reduce the number of cars on the road. Help us counteract this proposed change: Visit www.commuterbenefitsworkforus.com to learn more about this situation and to find out how to contact your Congressional representative to ask him or her to continue the transit and vanpool cap at $230 per month.