Tax Benefits for Using Public Transit

Starting in January, tax benefits for using public transit just got better for employee and employer.

Companies can give their employees tax-free transit commuter benefits up to $115 a month, up from $110 last year. Unfortunately, the federal government still gives higher parking commuter benefits -up to $220 a month, an increase of $5 from last year.

Employees can get this benefit three ways: by receiving up to $115 a month in tax-free benefits paid by the employer. This covers all modes of public transportation, including vanpooling.

Or employees can pay for commuting costs with pre-tax payroll deductions, similar to what many of you may be doing already with dependent care accounts or flexible medical accounts.

And the third way can be a combination of these two ways.

The American Public Transportation Association (APTA) points out that not only can commuters get a tax break, they can also be environmentally responsible by taking public transit. In fact, using public transportation is one of the most powerful ways to cut greeenhouse gases.

One person who switches to public transit reduces daily carbon emissions by 20 pounds or 4,800 pounds in a year. Consider these other statistics from APTA:

• Home weatherizing and adjusting your thermostat for heating and cooling saves 2,847 pounds of carbon per year.  Taking transit beats that by twice the amount of carbon saved.
• If you replace five incandescent bulbs with compact fluorescent lamps, you'll save 445 pounds of CO2 a year. That compares to saving more than 10 times that amount if you use public transit.
• Replacing an old refrigerator-freezer with a high-efficiency one saves 335 pounds of carbon a year, but taking public transportation saves more than 14 times that amount.

If just one person in a household changes from daily driving to public transit, you can reduce your household carbon footprint by 10 percent.

To read more about companies that have started a transit benefit program, click here.

So this year, take advantage of a tax commuter break - and help keep our Earth green at the same time.