Employee Benefits: Putting Transit on Par with Parking
Many workers today enjoy transportation fringe benefits – untaxed commuting resources from their employers, such as parking, transit passes or cash reimbursement for such expenses. However, according to the tax code governing such benefits, all forms of commuting are not created equal. Drivers have received greater benefits than transit or vanpooling commuters for most of the twenty years since transportation fringe benefits were incorporated into the tax code. Some members of Congress are looking to address this disparity once and for all.
Early last month, two bills were introduced in Congress – one in the House and one in the Senate – that would create parity between transit and parking tax benefits for commuters. Such a move is not unheard of – in 2010 and then again in 2012, Congress did raise the level of transit and vanpooling benefits to match those of parking benefits. However, both actions were temporary, and the benefits are set to revert to pre-2012 levels of $230/month for parking and $125/month for transit and vanpooling at the end of the year. The current bills would extend parity indefinitely (or at least until Congress would act again on the matter).
Encouraging commuting by transit and vanpooling was the original impetus behind the creation of transportation fringe benefits. Free parking was a given for many employees, while transit commuters received no equal benefit. The tax code amendment – tax code section 132(f) – was meant to remedy this inequality and further encourage non-automobile commuting. Yet, continued disparity in benefits has worked against this goal.
In Chicago, for example, $125 will cover a monthly pass for those commuting on transit within the city, but not one for most commuters who take the Metra rail system in from the suburbs – the very commuters that contribute the most to highway congestion and should be encouraged to use alternative travel modes.
In addition to the many benefits of increasing non-automobile commuting – such as decreased congestion and pollution, energy savings and increased air quality – parity will reward non-automobile commuters with the same tax savings that their driving colleagues receive, which could be substantial, especially for families with two commuters.
The pending legislation would represent the use of federal policy to promote sustainable transportation, something that we here at CNT heartily applaud. We commend Senator Chuck Schumer, who introduced the Commuter Benefits Equity Act to the Senate; and Representatives Michael Grimm, Jim McGovern, Peter King and Earl Blumenauer, who sponsored the Commuter Parity Act in the House. We encourage the members of House Ways and Means and Senate Finance Committees to act swiftly on these bills, and for Congress to approve this important piece of legislation for commuters nationwide.
For more information about the history and impact of commuter benefits and the current legislation, visit TransitCenter’s page on the issue.