Commuter Tax Benefit to Decrease Under Present Law

According to a press release from TransitCenter, Inc. (a nonprofit provider of commuter benefit programs), a provision in the 2009 federal stimulus bill increased the maximum pretax deduction that workers could apply toward monthly transit commuting costs from $120 to $230.  This level is the same as that allowed for parking expenses for those who drive to work.  However, the transit provision is set to expire at the end of 2010, causing the transit deduction to revert to $120; the allowable parking deduction would remain at $230.  Loss of this benefit would cause a net increase in riders’ commutation costs of up to 22% (assuming the national average income tax marginal rate of 31.6%).  This would put further pressure on commuter operators, who have been coping with ridership declines during the recession.