Senate approves increase to commuter pre-tax benefits

Senate Majority Leader Harry Reid gestures during a news conference on Capitol Hill in Washington, Thursday, March 8, 2012, to discuss political roadblocks on passing the highway bill. (AP Photo/J. Scott Applewhite) Senate Majority Leader Harry Reid gestures during a news conference on Capitol Hill in Washington, Thursday, March 8, 2012, to discuss political roadblocks on passing the highway bill. (AP Photo/J. Scott Applewhite)

The US Senate approved legislation Wednesday that would reverse cuts to pre-tax transit accounts available to commuters who use public transportation and vanpools. The provision is tucked into a larger bill to overhaul transportation programs.

If approved by the House of Representatives, the law would increase the monthly amount that can be set aside on a pre-tax basis for public transportation expenses to $240 a month, up from the reduced limit of $125 a month that became effective at the beginning of the year. 

Advocates for the measure say it would help commuter costs by bringing to parity the amount that can be used for both parking and transit expenses. As the law stands now, only parking costs are set at the maximum $240 a month.

The tax credit for commuters using mass transit is embedded in the Surface Transportation Reauthorization bill and includes a retroactive extension of benefits dating back to Jan. 1, 2012, when benefits for public transportation lapsed to a lower level.  While benefits for mass transit riders were reduced from $230 to $125 per month, the limit to cover parking costs was increased from $230 to $240 per month.

“The transit benefit is an important tool to promote commuter vanpooling in areas where more traditional public transportation services are not available,” said Jon Martz, Public Policy Chair at the Association for Commuter Transportation, in press release provided by the CommuterBenefitsWorksForUs.com coalition. “The provision in the Senate transportation bill extending parity will provide Americans in communities, both large and small, the ability to affordably utilize transportation alternatives such as vanpooling.”

“There’s no reason for Congress to grant preferential treatment for individuals driving to work over those taking public transportation,” added Gerard Bridi, President of Edenred USA, a national provider of commuter benefits. “With gas prices soaring and more people turning to public transit, Congress should encourage commuters to use public transportation, not penalize them.”

According to the Associated Press, the Senate's 74-22 vote stepped up pressure for quick action by House because "the government's power to collect about $110 million a day in federal gasoline and diesel taxes, the main source of revenue for highway and transit programs, is set to expire March 31."

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