Sen. Menendez: Public Transportation Tax Benefit Critical For NJ Commuters

Sen. Menendez: Public Transportation Tax Benefit Critical For NJ Commuters

GOP blocks attempt to extend tax break scheduled for reduction

HOBOKEN, NJ - With the federal public transportation benefit set to be drastically reduced at the end of the month, U.S. Senator Robert Menendez criticized Republican action last week to block the extension of this critical tax break which saves New Jersey commuters more than $1,000 a year. Last week, Republicans refused an effort by Senator Schumer to pass an extension of the benefit.

"Hundreds of thousands of New Jerseyans rely on this tax break to help them afford the ever rising cost of commuting, and a week before Christmas, Republicans are dumping coal in their stockings," said Sen. Menendez. "New Jersey's economy relies on transit and we must make sure it's not only reliable, but affordable. Not only should we extend this benefit, but we need to make it permanent."

"With so many New Jerseyans dependent upon public transportation, it is critical that these benefits are extended in order to make sure commuters are getting the tax breaks they deserve," stated Congressman Albio Sires. "Senator Menendez has and continues to be a major supporter for those who take mass transit to work and in their everyday lives and I applaud him in taking action on this important issue and I intend to support these efforts in the House."

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. Until 2009, commuters who drove to work received a greater tax break than those who took public transit. In 2009 the public transit benefit was almost doubled from $120 per month to $230 per month, creating a savings of over $1000 per year for commuters. Currently 2.7 million commuters nationwide take advantage of the benefit.

By failing to pass legislation to preserve equity between the tax treatment of transit benefits and benefits for parking, when current law expires on December 31, 2013, the transit commuter benefit will drop from $245 to $130 per month, while the parking benefit is automatically adjusted up to $250 per month.

Menendez has long supported efforts to correct this disparity. He has co-sponsoredthe Commuter Benefits Equity Act in the last three congresses, beginning in 2009. This legislation would create permanent parity between the transit and parking benefits, ending this problem once and for all.

Sample NJ commuter savings:

NJ TRANSIT Train - The public transit benefit currently covers 100% of a $208 monthly pass between Paterson and New York Penn Station, and similarly covers 100% of a $245 monthly pass from New Brunswick to Trenton. If the benefit is not extended, these percentages will fall to 62.5% and 53% respectively.

NJ TRANSIT Bus - The public transit benefit currently covers 100% of a $166 monthly pass between Glassboro and Philadelphia. This would fall to 78.3% if parity is not maintained.

NJT handled more than 266 million passenger trips in 2012 (that covers all their modes-rail, bus, etc). And, according to the 2013 APTA transit fact book "The New York-Newark, NY-NJ-CT urbanized area was the site of the most transit use with all the transit agencies headquartered in the area carrying 4.1 billion unlinked passenger trips for 22.4 billion passenger miles."

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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