Senator Charles E. Schumer

FOR IMMEDIATE RELEASE: December 15, 2011

SCHUMER: COMMUTER TAX BREAK WORTH OVER $1,000 PER YEAR TO MORE THAN 500,000 NY COMMUTERS SET TO EXPIRE IN TWO WEEKS; LAUNCHES MAJOR EFFORT TO INCLUDE MASS TRANSIT BENEFIT IN YEAR-END TAX EXTENDER LEGISLATION

Current Federal Mass Transit Benefit Covers Up To $230 Worth of Monthly Commuting Costs, But Will Drop by Over $100 Without Extension; NY Commuters Saved Over $200 Million Last Year Through Benefit

Commuters Who Use Subway, Bus, LIRR, or Metro North Currently Have Opportunity for Up to $230 in Pre-Tax Savings, But Full Benefit Set to Expire at the End of Year

Schumer: The Clock Is Ticking On the Crucial Transit Benefit

With a commuter tax benefit worth over $1,000 to the average New York commuter set to expire in two weeks, U.S. Senator Charles E. Schumer, is making a major push for the tax benefit to be included in any tax extenders package that Congress passes in the next week. The federal mass transit tax break currently saves mass transit riders over $1,000 per year in pre-tax commuting benefits. The benefit is set to expire at the end of the year if it is not renewed or made part of the permanent tax code. The commuter benefit currently covers up to $230 per month from a person’s gross income to pay for their mass transit commutes and provides parity with a permanent benefit extended to drivers’ parking costs. The $230 monthly benefit is an increase from the $120 benefit that was in place until 2009.

Employees whose monthly mass transit fees are less than $230 can currently deduct the full amount of their commuting costs from their paychecks, tax free, through an employer benefit program. The cost is pegged to the IRS tax benefit that covers parking for drivers. Until 2009, commuters who drove to work received a greater tax break than those who took mass transit. In 2009 the mass transit benefit was almost doubled from $120 per month to $230 per month, creating a savings of over $1000 per year for commuters. Currently, 500,000 commuters in the Greater New York Metropolitan Area, and 2.7 million commuters nationwide take advantage of the benefit. Schumer was able to have the benefit extended last year, but it is now set to expire on December 31, 2011. Schumer is making a final push ahead of the year-end deadline to HAVE the transit benefit extended to keep it on par with the benefit drivers get.

“Make no mistake about it: the clock is ticking on this crucial transit benefit, and if Congress doesn’t act in the next two weeks, commutes will get more expensive for millions of New Yorkers,” said Schumer. “I’m fighting tooth and nail to get us over the goal line and get this extension passed so that New Yorker commuters can continue to enjoy the huge savings this benefit provides.”

Employees whose monthly mass transit fees are less than the $230 cap can currently deduct from their paycheck, on a tax free basis, their commuter costs. In many cases, employers assume the full, tax-free cost. The measure also helps employers save money by lowering their payroll taxes compared to if they paid the money in wages. Schumer says that with the increased benefit set to expire at the end of the year and transportation costs increasing every year, it is essential the mass transit tax benefit be made permanent. The current pre-tax benefit for drivers is slated to be increased by the IRS next year to $240 per month. Schumer’s bill, which creates parity between the mass transit benefit and parking benefit, would peg the mass transit benefit to the same rate, increasing it to $240 for next year as well.

Schumer authored legislation that passed as part of the economic stimulus package in 2008, allowing employers to offer their employees up to $230 per month in transit benefits tax free, equal to what they were offering tax-free for parking costs. The transit benefit reduces a commuter’s transportation costs by a third or more. If allowed to expire there would be a greater incentive for people to drive to work rather than take mass transit, as next year’s $240 pre-tax savings would only apply to those who drive. Schumer noted the $240 per month benefit will fully cover the monthly cost of riding all major mass transit systems in New York City, including subway, bus, and express bus, and will cover most of Metro North and Long Island Railroad commuting costs.

NYC Bus and Subway – The mass transit benefit covers the full $104 per month cost of an Unlimited 30-day MetroCard.

Express Bus – The mass transit benefit fully covers the monthly cost of buying a weekly pass on MTA express bus at $50 a week, for a total monthly cost of $200. If the benefit it not extended it will revert to $125 per month and only 58 percent of the cost will be covered. A commuter using Express Bus would be required to contribute $92.41 post-tax dollars each month to their commute, after taxes costing the commuter up to approximately $1,400 a year.

LIRR – The mass transit benefit now fully covers the typical monthly pass from the most common commuting areas. For example, the $223 cost of a monthly ticket from Garden City to Penn Station is fully covered by the benefit, but only 56 of the monthly cost would be covered if the benefit is not extended. Without an extension of the benefit, a commuter from Garden City loses $98 in pre-tax benefits a month, after taxes costing the commuter up to approximately $1,500 a year.

MetroNorth – The mass transit benefit now nearly fully covers the typical monthly pass from the most common commuting areas. For example, the $229 cost of a monthly pass from White Plains to Grand Central is fully covered by the benefit, but only 55% of the the monthly cost would be covered if the benefit is not extended. Without an extension of the benefit, a commuter from White Plains loses $104 in pre-tax benefits a month, after taxes costing the commuter up to approximately $1,500 a year.

Besides providing relief to commuters who already use the benefit, making it permanent will provide relief to those who have come to rely on the pre-tax savings as well to continue incentivizing the use of mass transit.

According to TransitCenter, in the New York metro area, commuters saved over $200 million last year because of the transit benefit and employers have saved over $45 million since the benefit went into effect in the New York area. Approximately 15,000 companies in New York offer the transit benefit covering more than a half a million employees. And in 2010, employers nationwide saved about $300 million in payroll taxes, money that can be reinvested to create jobs.

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