Tax break expected to change next month for commuters

At Market East Station. Transit riders and agencies have launched an effort to persuade Congress to keep the tax breaks as they are.
At Market East Station. Transit riders and agencies have launched an effort to persuade Congress to keep the tax breaks as they are. (STEVEN M. FALK / Staff Photographer, File)
Posted: December 07, 2013

Commuters who take trains or buses to work face a cut of up to $1,380 in their annual pretax transportation benefits, while commuters who drive will get a slight increase, starting next month.

Currently, both transit riders and drivers can set aside up to $245 a month to cover their commuting costs, through plans managed by their employers.

That "transportation fringe benefit" is similar to flexible spending accounts for medical or dependent-care expenses. Employees elect to deduct a certain amount of their salary for commuting costs; employees benefit by reducing their taxable incomes and employers benefit by reducing their payroll taxes.

But the transit benefit is caught up in tax-policy debates in Washington, and time is running out for congressional action to prevent the benefit from reverting to $130 a month (the 2012 limit of $125, plus a $5 inflationary bump). The parking benefit, meanwhile, is set to rise to $250, from the current $245.

Transit riders and agencies have launched a last-ditch effort to persuade Congress to maintain current benefits.

"We've sent letters urging them to extend parity - we want to preserve it at the level it is now," said Robert Healy, vice president of government affairs for the American Public Transportation Association (APTA). "Senators from the large states on the East Coast are pushing to extend this."

The transportation benefit is not especially controversial, but Healy acknowledged, "The challenge is that it's involved in politics well above itself."

A bipartisan congressional budget conference committee faces a Dec. 13 deadline to report on its latest efforts to reach a deal on taxes, automatic budget cuts, and deficit reduction. Any proposed changes to the federal tax code, which include the transit benefit, are caught up in that effort.

The transit benefit was put on par with the parking benefit in 2009, but only as a "temporary" benefit that required annual renewal, unlike the parking benefit, which is a permanent part of the tax code.

Congress renewed the equal level for transit in 2010, 2011, and 2013, but not in 2012.

About 2.7 million riders now use the transit benefit, according to the APTA.

"We would prefer that it stay on par with parking," said Stacy Bartels, manager of marketing and commuter services for the Delaware Valley Regional Planning Commission. The DVRPC administers RideECO, a locally managed commuter benefit program, for more than 700 employers in the Philadelphia region.

"One of our missions to to reduce congestion, and one of the ways to do that is to find alternatives to driving alone to work in a car," Bartels said. "This helps give people an incentive to take transit."

Nonetheless, Bartels said the DVRPC has alerted employers that the transit benefit may be cut for next year.

In Washington, Healy says there's "a decent chance" that the legislative "Kabuki dance on what we're going to do" will end with an extension of existing policies as a way for Congress to give itself more time to deal with broader tax and budget issues.

"They can't do a tax reform in four weeks," he said. "But will they do an extender?"

"The answer is 'Maybe yes.' "


BY THE NUMBERS

$245

Amount transit riders and drivers now can set aside each month in pretax transportation benefits.

$130

Starting Jan. 1, amount transit riders will be able to set aside each month unless Congress

takes action.

$250

Starting Jan. 1, amount drivers can set aside, under existing law.

2.7M

Number of riders who

now use the transit benefit, according to

the American Public Transportation Association.


pnussbaum@phillynews.com

215-854-4587

@nussbaumpaul

 

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