Proposed pre-tax transit benefit changes for 2012 - Metropolitan Planning Council

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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 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.



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