Commuter transit tax benefit restored through fiscal cliff deal
Under the fiscal cliff deal reached Jan. 1, Congress restored the maximum amount an individual can set aside pre-tax for mass transit expenses to $240, equal to the benefit received by those who drive to work and park. This move will benefit almost 1 million transit riders in the Chicago region.
When the stimulus passed in 2009, it included parity between transit and parking, but due to inaction by Congress, the transit portion was cut in half— from $230 a month to $125—when the measure expired Jan. 1, 2012. Meanwhile, the parking benefit increased to $240 a month to account for inflation. Unfortunately, the parity restoration is still temporary and will expire at the end of this year, unless Congress extends it again.
Illinois Reps. Hultgren, Biggert, Lipinski, Quigley, Dold and Rush offered an amendment to restore parity in the transportation authorization that passed last year. Language made it into the Senate passed version, but was cut in the final law.
Restoring parity with the parking tax benefit is a smart investment that decreases the tax burden on employers, reduces traffic congestion and our reliance on foreign oil, promotes cleaner air, and provides revenue for our cash-strapped mass transit systems.
Tax-free commuter benefits only may be provided through employee-funded, pre-tax payroll deductions or employer-funded or partially funded benefits. Workers may spend the money on commuter rail, subway and bus transportation, eligible vanpools, and commuter-related parking.