Affordable Transit Act now Law
Posted on 02/27/2015
New York City Mayor de Blasio Signs Affordable Transit Act into Law
Fortunately, there is a federal program that lets commuters hold on to that money. The federal transit benefit program (IRC Sec. 132 (f)) lets transit users save hundreds of dollars per year by paying for transit fare through their employers on a pre-tax basis, the same way people pay premiums on employer-provided health insurance or for certain retirement contributions. An employee at a business offering transit benefits can set aside up to $130 of their paycheck toward their transit costs each month, reducing their gross taxable income by the amount they set aside.
This means that a New Yorker making the median wage and buying $112 monthly transit passes will save $443 per year.2 A New Yorker spending more per month—for instance, commuting by express bus—can sign up for the maximum benefit amount of $130 per month and save $514 per year.3 These numbers are averages based on New York City’s median wage; each transit rider’s own savings depend on his or her earnings, tax filings, and transit usage. Not surprisingly, the program is popular: it is estimated that around 750,000 transit riders who both live and work in New York currently take advantage of transit benefits.4
1 “Subway and Bus Ridership,” New York Metropolitan Transportation Authority. http://web.mta.info/nyct/facts/ridership/index.htm
2 Savings estimates derived from the TransitChek benefits calculator. http://pages.transitchek.com/calculatesavings/english/index230cap.html
3 Such results are typical, but actual savings will vary and depends on the cost of transit options, the specifics of one’s tax status, and other such factors.
4 All aggregate figures in this report reflect the population of individuals who are both employed and reside in New York City, or relevant subsets thereof. Estimates including additional non-residents of New York City who use or would be eligible for transit benefits (not included in this analysis) would be significantly larger.
For those employers that will need to add this offering to their benefit suite, the good news is that there is time. We have vendor partners that get this set up for you swiftly and efficiently during your next benefits renewal.
If you have additional questions about the Affordable Transit Act, do not hesitate to call Florence DiLeo at 631-434-8200 extension 25 or Laura Vassino at extension 24.