Sen. Schumer provision would extend mass transit benefit
On Wednesday U.S. Senator Charles E. Schumer was able to include a retroactive extension of the mass transit commuter tax benefit in the Finance Committee’s mark-up of the Highway Investment, Job Creation, and Economic Growth Act of 2012, that will allow riders of mass transit to use up to $240 a month, tax free, to pay for their commutes. The benefit, which expired at the end of 2011, brings to parity the commuter benefit currently in place for those who drive their cars to work.
“We plan to use every tool available to us to see this benefit reinstated and made retroactive back to January,” said Schumer. “It makes absolutely no sense to incentivize driving to work and not incentivize the use of mass transit.”
Last year, 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. The cost is pegged to the IRS tax benefit that covers parking for drivers and would be increased to $240 with the extension offered by Schumer. 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 $1000 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 year-end negotiations, Congressional Republicans failed to include tax extenders in a year-end payroll tax cut deal.