Streams

Payroll Tax Agreement Leaves Transit Tax Behind

Friday, February 17, 2012

Commuters had high hopes that Congress would restore the full federal transit tax benefit, cut late last year, as part of the massive payroll tax cut and unemployment benefits bill passed today. But it didn’t happen Friday. 

U. S. Senator Charles Schumer (D-NY) said all tax extenders were excluded as part of the compromise on the payroll tax cut deal, including the mass transit benefit and others.  “The college tuition tax credit, and many other credits” were cut, Schumer said.

The credit allows commuters to deduct $125 of their transit costs from their pre-tax pay check. But the credit use to be worth $230. That amount was sunset out at the end of last year. And Congress has been unable to reach agreement on increasing the transit benefit.

Dan Neuburger with Wage Works Commuter Services said transit advocates will keep trying to find a way to restore the entire amount of the credit.  “We're hopeful that Congress will do the right thing and increase the benefit cap, so commuters aren't discouraged from public transit in favor of driving their car to work.”

He said the reduction of the benefit is essentially a tax increase.  “It’s especially hard on commuters in urban areas, like New York, ” Neuburger said.  The monthly pass to ride the Long Island Rail Road, New Jersey Transit or Metro-North Railroad, exceeds the $125 benefit. 

The next chance Congress will have to restore the full tax break for commuters could come when the U.S. House resumes work on the Transportation Bill after next week’s congressional recess. 

Senator Schumer is hopeful he the tax credit can be restored.  “We successfully attached the commuter mass transit benefit to the Highway Bill and are hopeful we will be able to get it passed,” Schumer said. 

But that might not be successful either - the transportation bill is currently the subject of a partisan debate.

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Comments [1]

jkorne from Long Island, NY

I think that it is now going to become cheaper for me to drive and park in NYC then to take public transportation.

Feb. 19 2012 11:25 PM

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