If you’re a federal government worker, you’ll soon get up to $255 a month to pay for transit under a tax bill Congress agreed on last night. Or, if your employer allows setting aside pre-tax earnings for transit, you will also be able to reserve more. This will translate into badly needed fare revenue for Metro — perhaps as much as $15 million a year.
The federal transit benefit lets employees at many organizations put pre-tax earnings aside to cover transit or parking (and sometimes also bicycling). In addition, some employers, in our region most notably the federal government, pays for employee transit up to the allowed transit benefit amount.
For the last two years, the transit benefit has been capped at $130, but $250 for parking The new law — which is expected to pass both houses and be signed within the week — will set both limits at $255, with increases to match future inflation.
Under an executive order signed by President Bill Clinton, the benefit to federal employees automatically increases to match the tax-free maximum. So federal employees whose commutes cost more than $130 a month (the benefit cannot exceed your actual fare) will soon see more money on their Metro farecards.
Lowering the cost of transit for long-distance commuters will attract more riders and bring in more fare revenue. A study by Metro estimated that the system lost 6,000 daily round trips as a result of the January 2014 cut in the transit benefit from $230 to $130. If these riders return at an average fare of $5 each way (only high-fare commuters are affected), the agency would gain $15 million a year in revenues.
MARC and VRE commuter trains can also expect more riders, as can express buses from outer suburbs.
Congress made the new limit retroactive, but few riders will benefit from this provision. Employers will not be able to make payments for past months (although it is still possible to make a payment for December). However, anyone who has been getting a transit benefit of over $130 a month and paying taxes on it will be able to deduct the entire amount (up to $255 a month) for the whole year.
Details of how the new limit will be implemented vary among federal agencies. It’s probably best, however, to apply quickly for the full amount of your commute expenses so that the added benefit will start as soon as possible.