Dem looks to keep expiring mass transit tax break

Del. Eleanor Holmes Norton (D-D.C.) has proposed legislation to maintain an expiring tax break given to people who use mass transit, which she said would keep commuting costs low for thousands of federal workers in Washington, D.C., and millions of people around the country.

Under current law, mass transit users can deduct the costs of riding trains and buses from their taxable income, up to $245 a month. But without action by Congress, that benefit will be cut nearly in half starting in January, to $130 a month.

{mosads}For mass transit riders, that means paying taxes on as much as $1,380 a year that was previously tax-free. Norton said last week that Washington is a “prime example” of a city that needs the tax break maintained, as the extension would encourage people to use mass transit.

“Millions of people commute in and out of cities every day, bolstering their economies and improving the overall wellbeing of the country, with this region as a prime example,” she said. “Why would we want to encourage people to drive rather than use mass transit?”

With the House out for the reaminder of the year, it appears likely that Congress will let the mass transit benefit expire. With no action, the tax benefit for parking will rise slightly from $245 to $250 a month.

Earlier this year, a bipartisan group of House members led by Rep. Michael Grimm (R-N.Y.) proposed permanently equalizing the benefits at $220 a month for both parking and mass transit.

Norton’s bill would increase the mass transit subsidy to $250 a month, but only for a year. She said she is proposing a one-year extension given the costs associated with a permanent extension.

The issue has been a focus of the National Treasury Employees Union, which represents thousands of federal workers across several agencies. The NTEU has encouraged members to urge Congress to extend the transportation subsidies, particularly in light of the pay freeze that these workers have faced over the last few years.

“The mass transit commuter benefit provides much needed relief in the form of reduced commuting costs for many working people, including tens of thousands of federal employees like myself that rely on public transportation to get to and from work,” the NTEU encourages people to write. “Many of these employees, already subject to a three year pay freeze and unpaid furloughs, are struggling in the current economic climate. A reduction in these benefits would impose a severe financial burden on us.”

While the Senate is in this week, there are no Senate companion bills to either Norton’s or Grimm’s legislation, and Senate Democrats have given no indication they would try to pass anything to extend the mass transit tax break.

Norton said if Congress does nothing this month, she would push to pass something next year and make it retroactive.