Along with the holidays comes some good news for commuters who take transit and carpool or vanpool.
As we tweeted a couple of weeks ago, the mass transit tax for commuters was about to expire this year. In 2009, a part of the American Recovery and Reinvestment Act (ARRA) increased the tax benefit from $120 per month to $230 per month–achieving parity with parking benefits–but it was set to expire on December 31, 2010.
However, last week President Barack Obama signed a bill including a provision that extends the $230/mo. benefit at least through the end of 2011.
What does this mean for you? Under the tax break, mass transit riders can save up to $1,000 a year by setting aside $230 a month to cover transit costs. The money is not taxed, and is equal to the pre-tax amount that drivers can set aside for parking.
The bill, which extends income tax cuts for all income levels for another two years and unemployment benefits for 13 months, includes extensions of two tax provisions key to the public transportation industry. The Senate approved the measure on Tuesday by a vote of 81-19.
The tax legislation includes an extension of the alternative fuels tax credit for transit properties through December 31, 2011. This provision expired at the end of 2009 and the tax credit will be applied retroactively to cover fuel purchased in 2010. The alternative fuels tax credit allows transit agencies that use compressed natural gas (CNG) and liquefied natural gas (LNG) to receive a 50 cent credit per gallon equivalent tax refund.
For more information about the tax break and the ARRA, visit the following resources:
- The American Recovery & Reinvestment Act (ARRA)
- Friday Update: Commuter Subsidy
- Mass-transit tax break to shrink while fares rise
Photo credit: magdaes