Transit Tax Benefit Equalized With Parking Benefit in Fiscal Cliff Deal

Happy New Year, transit riders! Thanks to some shrewd maneuvering on the part of some U.S. Senators, transit commuters will be able to claim as much in tax benefits as car commuters do in 2013.

Transit commuters could have a little extra change in their pockets in 2013, thanks to the fiscal cliff deal. Photo: ##

Slipped into the fiscal cliff deal approved by the House of Representatives last night was a provision to boost the tax incentive to commute by transit. The commuting costs that straphangers could claim as tax-deductible had been reduced to a maximum of $125 per month last year, well below the $240 that car commuters could claim monthly to offset parking costs.

With transit and parking benefits again equal, there will be one less pernicious financial incentive to drive to work alone, as David Alpert at Greater Greater Washington noted:

In approving this extension, [Congress was] able to give many American workers a tax cut along with helping our cities function more effectively and ending one small example of the many ways government “picks winners and losers” among transportation modes.

The equalized tax incentive for transit was extended only though the end of the year, though, so electeds will again have to act to put transit on equal footing with driving.

Politico said the provision is expected to provide up to $190 million a year in incentives for transit riders. Good to see some smart policy came out of that messy, messy budget ordeal, which will continue to play out over the next few months, with plenty of implications for how Americans get around.

UPDATE: Transportation for America reports Senator Charles Schumer (D-NY) and Congressman Jim McGovern (D-MA) were the leading advocates of the transit tax benefit extension.

9 thoughts on Transit Tax Benefit Equalized With Parking Benefit in Fiscal Cliff Deal

  1. Now, if there were some way to publicize this new tax benefit, maybe large numbers of everyday people would find out about it and switch to mass transit.  (Where available!)

  2. Except that this isn’t of any benefit to most city residents, who pay less than $125 per month for all of their transit use.  It’s of great benefit for suburban residents who commute into the central city, however.

    The best way to promote widespread transit use is to promote transit-oriented lifestyles, which tend to have lower travel costs but higher housing costs than suburban lifestyles.  If I could use that $240 toward my rent, I’d be a happy camper.

  3. How much more dense can NYC be?

    And in SF half the model for Caltrain is people living in a dense livable area commuting out to office parks for which there is no space in the city

  4. andrew, speak again..

    there is a growing number of unfortunate souls like myself who live in the 5 boroughs and still have to schlep to jersey to go to work.  NJTransit + subway >=$200 / month.  i could sure use the savings again.

  5. Of course, some city dwellers do benefit. But the vast majority of city dwellers don’t reverse-commute – if they ride transit, it’s generally within the city.

  6. The tax savings work best if you employer hooks up with the prepaid Transit Check program, and takes the money out of your pay – pre-tax.  All the paperwork is done for you.  But even if you “just” use transit in the city, it’s about 1/3 subsidized by the feds.  One third off is not small change!

  7. Unfortunately, my employer uses WageWorks who are known scammers. I had to stop using the benefit after being ripped off several times by WageWorks:(

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