Mass Transit Commuters in NY Will Save Hundreds Thanks to New Federal Bill
Work for a business with 20 or more employees? Soon you can kiss that $116/month Metrocard allotment goodbye. This week’s federal spending and tax-cut agreement will likely put into effect a permanent law that almost doubles the pre-tax earnings that New York mass-transit commuters can spend on fares, thereby saving them hundreds of dollars a year. As Crain’s reports, “The provision nearly doubles the maximum amount of pre-tax income they can use to pay transit fares. Currently $130 a month, the limit will be raised to match the amount that people who drive to work can spend in untaxed earnings on parking fees—$255 per month in 2016.” Plus, if Congress passes the bill as expected, the amount will continue to rise with the cost of living.
Senator Charles Schumer and other state politicians have long pushed for equal tax breaks for mass-transit riders and drivers, arguing that it makes no sense to incentivize driving a car in the city. Those who take higher-cost modes of transportation like the LIRR and Metro-North–and typically spend around $225 a month on commuting–will see the greatest savings. They’ll now have $3,060 in untaxed income annually to spend, up from the current $1,560, saving them up to $1,200.
The bill also benefits employers, who will owe less in payroll taxes. “It adds up to 7.65% of what their workers spend in pre-tax money,” explains Crain’s. Assuming the law goes into effect, employers will be required to begin compliance on the first of the year.
[Via Crain’s]
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