Use of public transit continues to grow as young people flock to major cities and our nation’s roadways become more congested. Many workers recognize the benefits of riding public transit, as it makes for an easier commute, costs less, helps reduce our country’s reliance on foreign sources of energy and improves air quality. Plus, pre-tax transit benefits are becoming more popular, as they provide an added financial incentive to use public transit and help reduce the out-of-pocket commuting expenses.
However, there’s a major roadblock impeding public transit commuters from maximizing their savings. Currently, the law allows a commuter to set aside up to $130 of pre-tax dollars per month for public transit commuting costs. On the flip side, the law allows a commuter to set aside up to $250 per month for the cost of their commute if they drive to work and park their car. You might be asking yourself, “Why would Congress offer a greater incentive to driving than to using public transit?” Good question! The answer has to do with the way the law governing commuter benefits is written.
In order to achieve parity between transit and parking benefit caps, Congress must continually pass “tax extender” legislation, authorizing transit to be raised to the same level of parking. Sometimes Congress passes such legislation and other times they don’t (or they pass it retroactively, not understanding this negates much of the positive impacts of the benefit). The result is uncertainty, confusion, and lost savings for employees (up to $575 annually), which reduces participation in transit benefits. With the current transit cap set at $130 per month, individuals can save $625 annually, but that figure could reach $1,200 annually if the transit benefit cap was at parity with the parking benefit.
The U.S. House of Representatives’ Ways & Means Committee has sought to address this by making many such “extenders” permanent law. While the Ways & Means Committee is currently reviewing a set of bills to make certain “temporary” tax provisions permanent, commuter benefits are not on the most recent list for review. It’s hard to understand why commuter benefits have been overlooked again. Millions of people across the country utilize commuter benefits, and local ordinances are being implemented in cities across the country that will require companies of a certain size to offer transit benefits to their employees. These local laws will result in more people being eligible to take advantage of transit benefits. Why then does government policy continue to favor driving to work over using public transportation?
It’s time to address this issue on a permanent basis. Senator Chuck Schumer (D – NY) and Representative Peter King (R – NY) have introduced bills in their respective chambers of Congress that make parity between the transit and parking benefit caps permanent. The bills have bipartisan support as Members of Congress understand the importance of rationalizing transportation tax policy. So then, why is parity not yet a reality?
In this political season, when Americans cast their vote and determine our nation’s priorities, make known your support for permanent parity between the transit and parking benefits. Please visit our coalition website at www.commuterbenefitsworkforus.com and let your elected officials know of your support. Your voice makes a difference!