FOR IMMEDIATE RELEASE: August 11, 2010
SCHUMER: CURRENT TAX BREAK WORTH UP TO $1,000 PER YEAR TO HUNDREDS OF THOUSANDS OF NY COMMUTERS COULD EXPIRE AT END OF YEAR; SENATOR PUSHES TO MAKE MASS TRANSIT BENEFIT PERMANENT
Today, U.S. Senator Charles E. Schumer said that the federal mass transit tax break, which currently saves mass transit riders over $1,000 per year, is set to expire at the end of the year and he is pushing to make the benefit a permanent part of the tax code. The commuter benefit covers up to $230 per month from a person’s gross income to pay for their mass transit commutes, which is an increase from the $120 benefit that was in place until 2009. Employees whose monthly mass transit fees are less than $230 can deduct the full amount from their paychecks, tax free. 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, but is set to revert back to $120 on December 31, 2010.
Today, the TransitCenter – a rider’s advocacy group – released a report saying that the enhanced tax break has saved Hudson Valley commuters over $86 million since it was passed.
Schumer, standing with transit advocates, businesses and riders who rely on the tax break at the White Plains Train Station, discussed his efforts to make the tax break permanent saying that it provides much needed relief for middle class families.
“Now more than ever, with increasing fares and reduced services we need to maintain incentives for middle class New Yorkers to use mass transit when commuting to and from work so they don’t have to break the bank,” said Schumer. “The last thing we should do is let this tax benefit expire. The mass transit benefit is a win for commuters because it can slash the cost of getting to work, it’s a win for businesses who enjoy a significant tax break to cover the cost of the benefit, and it’s even a win for the MTA because it helps boost ridership. We cannot afford to let this expire.”
Schumer’s legislation, passed as part of the economic recovery package, allows employers to offer their employees up to $230 per month in transit benefits tax free, equal to what they can offer tax free for parking costs. While the transit benefit typically reduces a commuter’s transportation costs by a third or more, the old disparity between the two benefits created an inefficient incentive for people to drive to work rather than take mass transit.
In the New York metro area alone commuters typically save well over $150 million a year because of the transit benefit. Employers have saved significantly as well—over $35 million since the benefit went into effect in the New York area. Approximately 15,000 companies in New York offer the transit benefit, covering about 650,000 employees.
Below is how the increase in benefit would help Hudson Valley Metro-North commuters:
Schumer said that the New Yorkers who benefit the most from the transit benefit are people who commute from the outer boroughs, like Westchester. Under the old cap of $120 per month, only a small portion of the total monthly cost of commuting on the ExpressBus, LIRR and MetroNorth was fully covered. With a permanent increase to $230 per month, Schumer said that now even with last year’s fare hikes, the full monthly cost of commuting would be covered. The added subsidy will not only benefit employees, but will also provide additional tax-relief for businesses who contribute to their employees’ deductions and will encourage employers to become involved in the transit choices of their worker.