Tax Reform Preserves Commuter Benefit
Recent Media Reports Suggesting Otherwise are Incorrect
Over the weekend, media reports indicated that ‘commuters lose transit, parking, biking benefits’ in the recently agreed to tax reform package. These reports are incorrect. The tax reform legislation that is expected to be passed by both the House and Senate later this week preserves section 132(f) of tax law, which is the section of law that provides commuters with a transportation benefit.
The confusion comes from a section of the tax reform package that does eliminate the ability of employers to write-off subsidized parking and transit costs. While not our preferred outcome, ACT does not believe that this will have a major impact on transit benefit programs being offered by employers across the country. There are two primary reasons for this, first, most transit benefit programs are provided as a pre-tax program (not as a subsidy). Additionally, employers who provide pre-tax programs, as well as those who offer subsidized programs, will continue to receive payroll tax benefits. Second, for many employers who choose to subsidize, they do so as part of a broader employee benefits program aimed at attracting and retaining their desired workforce and not for the purpose of receiving a corporate tax write-off. It should also be noted that the tax reform package reduces those corporate tax rates from 35% to 21%.
The tax reform package does eliminate the bicycle benefit. The new law does permit employers the ability to write-off subsidized bike programs; however, individuals will have to report that benefit as taxable.
David Straus, Executive Director of the Association for Commuter Transportation, had the following to say:
‘This is an important victory for our association and its members, but more importantly, this is a victory for the American commuter. I want to thank the many bi-partisan members of the House and Senate who worked to preserve the benefit. ACT will work to restore the ability of employers to deduct expenses that reduce the number of commuters who drive alone and work to restore the bicycle benefit in a way in which it is better than before.’