For the second time in as many years, the nation’s public transit riders are looking to Congress to extend an expiring provision of the federal tax code that sets the pre-tax limit for the public transportation portion of the commuter benefit at $230 per month.
Congress has until Dec. 31, 2011, to enact legislation that would maintain the current $230 level, which is equivalent to the current pre-tax limit for the parking portion of the benefit. If Congress fails to act, the monthly parking limit will increase to $240, due to an automatic cost-of-living increase, while the public transit limit reverts to $125 per month. [APTA is working on several fronts to preserve this benefit.]
The public transit portion of the commuter benefit is a valuable, cost-saving measure that allows employees to withhold up to $230 per month from their paychecks, tax free, and use that money to purchase public transportation fares. More than 2.7 million commuters take advantage of the benefit, which can save them as much as $1,150 per year.
In addition, surveys have shown that the benefit creates a true incentive for commuters to switch to public transit instead of driving to work alone. This helps to reduce traffic congestion, preserve the environment, and reduce the nation’s reliance on foreign oil.
The benefit also helps employers save money. In 2009, employers saved approximately $300 million in payroll taxes by offering the benefit—money that could be reinvested to help create new jobs.
Prior to 2009, the monthly limit for the public transit benefit was $120. However, Congress—with the support of many public transit advocates, including APTA—increased the limit to $230 to bring it on par with the parking limit as part of the American Recovery and Reinvestment Act. The increase in the public transit benefit was only temporary, however. Last year, Congress enacted legislation to extend the $230 limit for an additional year.
Sen. Charles Schumer (D-NY) and Rep. James McGovern (D-MA) have introduced legislation, the Commuter Benefits Equity Act, that would create permanent parity between the public transit and parking portions of the commuter benefit. This bipartisan legislation enjoys wide support among public transit advocates and awaits consideration in Congress.
To preserve the current limit for the public transit benefit, it is critical that Congress enact this legislation, or an additional extension, prior to the end of the current legislative session.
Call to Action for APTA Members
APTA is reaching out to advocates nationwide through its more than 100,000 Facebook fans, its Twitter feed, and online. Members are encouraged to link to APTA’s social media outreach and encourage their riders to take action by sending letters to their Congressional representatives in support of extending the public transit commuter benefit.
APTA will also issue a press release to the national media and provide a template release for members to use locally.
The text of a letter from APTA President and CEO Michael P. Melaniphy to Sens. Max Baucus (D-MT), chairman of the Senate Finance Committee, and Orrin G. Hatch (R-UT), ranking member of the committee, can be found here.
More information on supporting the Commuter Benefits Equity Act is available from Mantill Williams.
In addition, APTA is part of TransitCenter’s coalition of public transit advocates, which includes several national advocacy groups and businesses. This coalition has launched an advocacy campaign—“Commuter Benefits Work for Us”—to encourage Congress to enact legislation to maintain the current pre-tax limit. The campaign has created a web site where public transit riders and advocates can learn more about the public transit benefit.