Region’s Commuters Received Mass Transit Tax Credit Until it Expired in 2013 But Bipartisan Legislation that Could Soon Receive Vote Would Retroactively Restore Tax Credit / Casey, Joined by SEPTA Officials, Transportation Advocates Push Quick Vote on Measure, Legislation that Would Make Tax Credit Permanent
Philadelphia PA- Today, U.S. Senator Bob Casey (D-PA) joined by officials from SEPTA and mass transit advocates from across Southeastern Pennsylvania, pushed to renew an expired tax credit that has allowed Philadelphia region commuters to save nearly $1,000 annually on their taxes since 2009. The Mass Transit Tax Credit, which expired in 2013, could soon be renewed retroactively when Congress is expected to take up tax legislation. Casey pushed for a quick vote on the measure and advocate for legislation that would make the tax credit permanent.
“Passing this legislation will put more money into the pockets of commuters in Southeastern Pennsylvania and aid our economy,” Senator Casey said. “This is a commonsense sense approach that gives mass transit users the same tax benefit that those who drive to work receive. I’m hopeful that we’ll pass this legislation in the coming weeks.”
“The Authority’s ComPASS program is a proven and cost effective way for businesses to reduce their employees’ transportation costs while encouraging more commuters to take advantage of the many benefits of public transportation,” said SEPTA General Manager Joseph Casey. “We are grateful to Senator Casey and members of the Southeastern Pennsylvania House delegation for their efforts.”
“Approximately 34,000 SEPTA riders are participating in SEPTA’s ComPass program,” said Richard Burnfield, SEPTA’s Chief Financial Officer. “When the transit benefit was equal to the parking benefit, program participants could have potentially saved up to $900 each year.”
Background Information on ‘Consumer Transit Parity’
Until 2009, commuters who drove to work received a greater tax break than those who took mass transit. In 2009 the mass transit benefit was almost doubled from $120 per month to $230 per month, creating an average savings of over $1000 per year for commuters. Employees whose monthly mass transit fees are less than $245 can currently deduct the full amount of their commuting costs from their paychecks, tax free, through an employer benefit program. The cost is pegged to the IRS tax benefit that covers parking for drivers. Businesses that offer the benefit also save money due to a reduction in the amount of payroll taxes they must pay for workers who participate in the program. However, the transit portion of the tax break expired at the end of 2013 and now people commuting by mass transit are only allowed to set aside $130 in wages tax free. This resulted millions of Americans losing money in their paychecks and also has created an incentive for driving rather than commuting by mass transit.
Background of Commuter Transit Parity Benefit Impacts on SEPTA
SEPTA’s employer-offered pre-tax commuter benefit program is called ComPass: Literature from SEPTA distributed to prospective employers when the benefit was equal to parking ($245/month) indicated that a participant could save nearly $900 annually (this included the 5% fare discount that SEPTA also offers ComPass participants).
Sample Tax Savings of a Worker Making $50,000 year
|
Without Commuter Benefits |
With Commuter Benefits |
|
|
Salary |
$50,000 |
$50,000 |
|
Commuting Costs |
$2,940 |
$2,940 |
|
Taxable Income |
$50,000 |
$47,060 |
|
Federal Taxes Paid (25% bracket) |
$12,500 |
$11,765 |
|
Payroll tax |
$3,825 |
$3,600 |
|
Take Home Pay |
$33,675 |
$34,635 |
|
Savings |
$0 |
$960 |
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