CHICAGO –(ENEWSPF)–January 25, 2016. As tax season begins, U.S. Senator Dick Durbin (D-IL) today encouraged employers and mass transit commuters to take full advantage of a tax benefit that was strengthened and permanently extended by Congress late last year. The tax-free benefit could yield $1,000 annually in federal and state tax savings for qualified mass transit commuters.
As part of the omnibus spending and tax bill, Congress passed a permanent increase of the commuter tax benefit for mass-transit riders, restoring parity between employer-provided transit benefits and parking benefits for commuters who drive. With the expiration of tax extenders at the end 2014, the maximum monthly tax exclusion for employer-provided transit benefits fell to $130, while the exclusion for parking benefits remained at $250. This created an incentive for commuters to drive to work, which contributed to congestion on highways in major cities across the nation.
For the 2016 tax year and beyond, the tax-free benefit has been increased from $130 to $255 dollars per month, bringing long-sought permanent parity between employer-provided mass transit benefits and parking benefits.
The commuter tax benefit allows participating employers to subsidize employees’ commuting or parking costs with pretax dollars up to the limit allowed by law, which lowers the amount of payroll taxes they have to pay on employee wages. Alternatively, employees can pay for commuting or parking expenses with pretax dollars deducted through a participating employer’s benefit program, reducing the amount of income and payroll taxes they pay on their wages.
“This renewed – and improved – tax provision will help make commuting more affordable for thousands of Illinoisans. This program is a win-win for employers and employees, and offers significant environmental benefits as well. I encourage more employers to offer this program, and commuters who have access to the benefit to take full advantage of it,” Durbin said. “As transit ridership levels continue to hit record levels across the country, I’ll continue to work to make Illinois’ mass transit more affordable and reliable for all people.”
There are more than 1,400 companies and 22,000 employees participating in the RTA Transit Benefit Fare Program and nearly 52% of Metra riders currently use transit benefits. For more information on how to sign up for the program, visit http://mytransitbenefit.com/.