Tax-free commuter benefit may be slashed
Tens of thousands of Bay Area transit riders, already reeling from fare increases and service cuts, stand to see their tax-free commuter benefits slashed in half unless a bill to extend them can escape the post-election gridlock in Congress.
The 2009 economic stimulus bill boosted to $230 the monthly amount a worker can take out of his or her paycheck to pay for transit expenses. The bill made that amount equal to the tax-free benefit maximum commuters can use to pay for parking. But the provision expires at the end of this month, and absent congressional action, the maximum benefit for transit riders will shrink back to $12o a month.
“It’s going to be a much bigger hit on the pocketbook,” said Nick Caston, 27, a political consultant who lives in Santa Rosa and commutes by bus or ferry to San Francisco.
How hard the benefit cut would hit transit riders depends on the pre-tax amount individuals deduct from their paychecks to pay for commuter benefits, which are typically delivered as paper vouchers, credits for use in an online ticket store or automated electronic deposits.
But the change would cost many commuters $500 a year in additional taxes, said Carli Payne of Transform, a Bay Area transit advocacy group. It could also hit employers’ bank accounts, she said, because they’ll have to pay taxes on higher payrolls.
“Commuting is a big part of Bay Area life in general,” said Charles Johnson, a systems engineer who rides the ferry between Alameda and San Francisco. “The impact will be felt disparately here.”
Transform is among the groups lobbying for the extension along with transit agencies and companies like Commuter Check, which provides the benefits. Sen. Charles Schumer, D-N.Y., has introduced a bill that would make the higher transit benefit permanent. Sen. Barbara Boxer, D-Calif., is among the co-sponsors.
The bill has no organized opposition, backers say, but it’s stuck in the end-of-the-session, post-election morass in Washington, and the fact that it has to do with taxes doesn’t help.
“If it goes, it’s going to have to be part of a bigger package of things,” said Randy Rentschler, a spokesman for the Metropolitan Transportation Commission who also oversees the regional agency’s legislative activities.
Rentschler said it’s not clear what kind of effect the reduced benefits would have on transit ridership. But he thinks it sends the wrong message to offer parking benefits that are higher than transit benefits.
So does Ellie Casson, 25, a San Franciscan who doesn’t own a car and commutes to her job with the Greenbelt Alliance in San Jose on Caltrain. Her monthly transit costs total at least $300.
“For a region that prides itself on sustainable living, there are lots of decisions that have been made lately that make it challenging to live without a car,” she said, referring to the fare hikes and service cuts that have hit nearly every transit agency. “We need to be subsidizing transit to the same extent that we support driving.”