Tax Benefits For Mass Transit Commuters Set To Expire

Tax Benefits For Mass Transit Commuters Set To Expire

On January 1, tax benefits for mass transit commuters across the nation are set to expire — and Congress’ newest budget deal does nothing about it.

In five days, Americans who commute by train or bus will no longer be able to put aside the $245 a month — before taxes — they are currently allowed in order to cover their commuting expenses. Instead, the cap will be reduced to $130 a month — only $5 above the 2012 cap.

Though the benefits have bipartisan support, because Congress is out of session until the new year and will take up the issue in the first quarter, commuters will probably not see a cap increase for months.

“Unfortunately many people will lose not only the January, February and March tax break, but probably in April, too,” Dan Neuburger — the president of commuter services at WageWorks, the largest provider of benefit plans for workers and commuters in the United States — told the Washington Post.

And because the cut is so steep, according to the Post, the new cap could result in “nearly $1,000 in higher costs next year” for “heavy users.”

Commuters, however, are not the only ones set to lose from the reduction. Employers — who must elect to participate in commuter programs so that their employees are able to reap the pre-tax benefits — are also set to lose money. When employees can no longer deduct pay before taxes to cover their commuting expenses, employers pay more in payroll taxes. Also, because drivers will see an increase in their monthly parking benefits, from $245 a month before taxes to $250, mass transit users will not just lose money, but might also be tempted to start driving, if possible.

Advocates of extending the benefits — which, despite the delay, will probably happen sometime in early 2014 — argue that the best solution is to equalize the savings given to commuters and drivers, “permanently,” as the Post notes.

Just last week, New York senator Charles Schumer (D), who estimates “some 700,000 New Yorkers” will be affected by the cap reduction, tried to get Senate approval to renew the benefits, but ultimately failed. Other lawmakers — even those in favor of extending the benefits — argue that Congress should address all the expiring tax provisions at once.

“I think it’s not unfair to do it ahead of the other tax breaks,” counters Schumer. “Because of the unique way it functions…  it’s harder, although not impossible, to enact retroactively.”

Beside the tax benefits for commuters, other rejected tax provisions this December include tax credits for research and experimentation, reduced state and local sales taxes, tax breaks for the renewable energy industry, and the Emergency Unemployment Compensation (EUC) program. Because the House left for vacation in early December, the Tax Extenders Act of 2013, proposed last Thursday, could not become law. It could have been applied retroactively to the beginning of the new year, but Congress failed to do that as well.

The problem with not renewing tax benefits and credit for particular businesses and programs is that Americans lose money, and eventually the nation does, too. Not extending benefits like those offered through the EUC, which could affect millions across the nation who are unable to find work, and reducing the tax credit for research and experimentation — which hurts technological and medical advancement, especially for smaller companies just beginning their research — will only slow down the economy’s recovery process.

Photo: Psychohh via Flickr


Start your day with National Memo Newsletter

Know first.

The opinions that matter. Delivered to your inbox every morning

Donald Trump
Former President Donald Trump

Imagine this: You’re a clerk to a judge in a New York State court. You graduated from the Cardozo School of Law in 2010, and since then, you have worked as an associate in a New York law firm. For five years, you worked for the City of New York in its Special Litigation Unit handling law suits against the city. You have been the clerk to Judge Arthur Engoron since 2019, getting up in the morning and traveling by subway into Manhattan to your office in his chambers, or sitting beside him in court, advising him on cases, filings, motions – the constant flow of legal documents and questions that any judge in a big city court deals with constantly.

Keep reading...Show less
Trump Touts New Push To 'Repeal And Replace' Obamacare

The late Sen. John McCain gives thumbs down to Affordable Care Act repeal in July 2017

Photo by Library of Congress on Unsplash

Donald Trump is once again living in the past, trying to resurrect a Republican political debacle that even the Freedom Caucus has abandoned: Obamacare repeal. “The cost of Obamacare is out of control, plus, it’s not good Healthcare. I’m seriously looking at alternatives," he spewed on Truth Social on Saturday.

Keep reading...Show less
{{ }}