Fiscal Cliff Deal Will Make it Cheaper to Use Transit in 2013

Spokane Transit Low Floor Hybrid vehicle. Image – Atomic Taco, Flickr

The fiscal cliff deal includes a provision that will make it cheaper to use transit in 2013 for many workers, compared to 2012. It’s a provision that the Senate tried hard but failed to include in the final version of MAP-21.

The change increases the pre-tax benefit employers can offer to employees for using transit from the current $125 a month to $240 a month. That puts it on par with the pre-tax parking benefit. These benefits are offered by many employers, particularly in larger urban regions. The provision is retroactive to the beginning of 2012, but that is likely to benefit few commuters. Typically, the pre-tax benefit is offered in a worker’s monthly paycheck.

The 2009 stimulus act equalized the benefits, but the increased transit benefit expired at the beginning of 2012. Meanwhile, the parking benefit  was inflation-adjusted by an additional $10, to the current $240 dollars. Some view that as an unfair subsidy for driving over transit.

That’s the good news.  The bad news is the higher benefit is scheduled to expire at the end of 2013 (unlike the parking benefit). Transit stakeholders will certainly take a run at extending the full benefit into the future.

American Public Transportation Association (APTA) President and CEO Michael Melaniphy commented:

“For 2013, there is no longer a financial bias in the federal tax code against public transit use. This has always been an issue of fairness, and public transit advocates are pleased that the federal tax code will again provide transit riders with the same tax benefits according to those who drive to work.”

The bill also extends through 2013 the alternative fuels tax credit refund that many public transit systems utilize to offset costs associated with using natural gas and other alternatively-fueled vehicles.

Read a transit-supporter’s intriguing argument against the federal transit benefit.