January 2013 Update:  As a provision in the “fiscal cliff” agreement, Congress has restored the pre-tax benefit for transit commuters to $240 per month through the end of 2013. The fix is  also retroactive for 2012.

On December 31, 2011 New York’s transit commuters were hit with a tax hike when the federal commuter benefit expired, dropping the maximum monthly limit from $230 to $125.  An estimated 15,000 employers with more than half a million employees in New York State offer the transit tax benefits, according to TransitCenter, a leading provider of tax-free commuter benefits.

Monthly costs for typical express bus commuters in New York City exceed $200, and the amounts that commuter rail riders must pay are often substantially more than this. Monthly fares from the Long Island Rail Road’s Ronkonkoma station and the Metro-North Railroad’s Southeast station are $334 and $360, respectively. Total commuting costs over $400 per month per person are not uncommon, and pre-tax commuter benefits offer a significant financial offset, while simultaneously:

• Encouraging Transit Use
• Supporting fare revenue streams for Transit Authorities
• Reducing Congestion and Protecting the Environment
• Providing Equity between driving and Transit Benefits

Unfortunately, the limit set for the pre-tax commuter benefits has historically lagged the limit established for a similar benefit that helps those who drive to work pay for their parking. The current monthly limit for transit benefits is $125, while the limit for parking benefits was increased to $240 per month. In this day and age, it makes no sense for government to provide disincentives for using public transportation.

Providing greater tax benefits for driving to work than for taking transit is counter to smart growth goals. Using transit to commute to work benefits the environment and is an efficient use of our infrastructure and resources. The pre-tax commuter benefits provide a much-needed financial relief to transit users, especially transit dependent communities who are disproportionately impacted by service reductions and fare hikes.

Empire State Future will continue to educate on S 2728-C (Fuschillo) A 6175-B (Weisenberg)– An act to amend the tax law, in relation to qualified transportation fringe benefits.