The American Recovery and Reinvestment Act (a.k.a. the stimulus) provides a benefit that could save transit riders over $1,000 a year. The federal bill signed into law last month raises the amount of pre-tax income an employee enrolled in a commuter benefits program can use to pay for mass transit or vanpool expenses, from $120 to $230. This also creates parity between the transit benefit and the commuter parking benefit, which was already $230.
Sen. Chuck Schumer has pushed for increased transit commuter benefits for years and was instrumental in getting the benefit included in the stimulus.
Though the $120 cap was fine for employees purchasing $25 weekly or $81 monthly unlimited MetroCards, many commuters pay more. Monthly passes on Metro-North, the LIRR, and NJ Transit can exceed $200. NYC express bus riders, who pay $41 per week, and riders of public and private commuter buses will also benefit from the raised cap.
Commuter benefit programs are a popular perk offered by many employers because they save both the employee and the company money. TransitCenter, which created the nation’s first commuter benefits program and pushed for the legislation to increase the commuting cap, estimates that companies can save up to $100 more per employee in annual payroll taxes. TransitCenter research has found that among employees who sign up for commuter benefits, 41 percent increased their use of mass transit.
