I know, I know, nobody seems all that thrilled about the last-minute deal pushed through to avoid hurtling over the fiscal cliff. But believe it or not, as part of the deal, a tax benefit for public transit riders was significantly increased.
As heard on Connecticut Public Radio this morning, employees who rode public transit to work used to be able to claim up to $125 month of their commuting expenses as a pre-tax benefit. In contrast, that benefit applies to up to $240 a month for parking expenses. Kinda unfair, right? It was this disparity that was addressed as part of the fiscal cliff deal.
So now, those who take public transit to work can claim up to $240 a month of their expenses as pre-tax benefits — nearly twice as much as before. According to Steve Higashide of the Tri-State Transportation campaign, this translates to a tax cut of $400 for a Metro-North rider who makes $50,000 a year. The cut will vary, of course, depending on your tax bracket and how much you spend on public transit, among other factors — but anyone traveling from Connecticut to Grand Central Terminal is definitely spending more than $240 a month, so they’ll claim the full benefit in that respect. A monthly pass from Stamford to Grand Central Terminal is nearly $300, for instance. According to Forbes, the tax cut could be as high as $550 for some.
The law applies to the year 2013, and is also retroactive to 2012. But no mechanism has been decided yet for how exactly the retroactive tax benefit will be applied. That is likely to be an administrative headache for the government, Forbes reports.
Now, of course, this also only applies to people whose employers offer these pre-tax benefits. According to Higashide of TSTC, 15,000 companies in New York City alone offer them, and 500,000 people who work in New York — which presumably would include many Connecticut and New Jersey residents — take advantage. He didn’t have numbers for Connecticut, but presumably, some of the big companies here also offer the benefit. So, this is likely to affect a heck of a lot of commuters in the tri-state area and beyond.
Readers — who among you is getting a tax cut? Have you figured out how much?