One of the “temporary” tax cuts that becomes a political tool each year is the federal deduction for employer commute subsidies. Long at a level just above $100 per month per employee, in 2008 Congress first proposed raising the level to the symbolically inportant $230 per month — the same monthly maximum that employers are allowed to write off by providing parking. It actually became law in the 2009 stimulus, and then an annual renewal watch, one that died at the end of 2011.
Brent Hunsberger reports that the full-size break has re-emerged as part of the fiscal cliff deal:
Last year, the amount workers or employers could set aside pre-tax for commuting on public transit dropped from $230 to $125. But commuters who drove and parked weren’t impacted. In fact, the cap for parking costs increased from $230 to $240.
The fiscal cliff deal re-establishes “parity” on this break for public transit users. They can now sock away $240 a month for 2013…
Still, the legislation made this change retroactive to 2012. It’s Only Money’s isn’t sure what that means, practically speaking. Do commuters who could have socked more away each month last year suddenly get to make up for that? If so, how? On their 2012 Form 1040?
Although this is a big deal for many East Coast commuter rail riders that pay fares that are unimaginable here, locally this will only marginally impact most long-haul ST and CT commuters. Riders would have to purchase a $3.50 monthly pass to be even nominally affected by the $125 threshold.
Nevertheless, any time policy moves away from actively favoring driving to work that’s a positive thing.
The broader “fiscal cliff” deal is off-topic for this post.