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.

8 Replies to “Fiscal Cliff Deal Restores Transit Parity with Parking”

  1. This is great news for me! I am a walk-on ferry+bus commuter, which puts my monthly commuting costs above $125. My employer will pay for both of my monthy passes now, which is great!

  2. Those fares you linked aren’t even that high. My buddy from high school has a minimum wage internship in NYC right now, so he lives at home to save money. The round trip train ticket to get from Hamilton to NYC on NJTransit is $30. The monthly pass is $400. The train is still packed, even with 10+ car sets and they run expresses from Princeton Jct (the stop after hamilton) all the way to Newark, because otherwise there just wouldn’t be room.

    I wish NJ transit broke out train cost/revenue vs. bus cost/revenue because I would be willing to bet train operations are close to 100% farebox recovery.

    1. he lives at home to save money. The round trip train ticket to get from Hamilton to NYC

      One must wonder whether it’s a public policy failure that living 60 miles away from work is seen as a way to save money.

      1. I don’t disagree but I don’t really see an alternate here. 35 hours a week @ $7.25 isn’t exactly a lot of money, and the chance you get mugged walking home from work is much lower in Pennington, NJ then anywhere you can live for $400/month (esp. for only a 4 month lease) in or near NYC.

        It’s not like he would qualify for any sort of public assistance.

      2. Our son had a short internship in DC, and then moved to NYC after graduation – the living arrangement in DC was to rent a bedroom, and the first housing in NYC was also renting a bedroom before moving to a basement apartment with a roommate.

        It can be done cheap, one must manage their expectations.

      3. Living with parents is a special case. It’s pretty hard to compete with $0 housing cost.

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