Millions of people across the United States will experience a significant increase in the cost of their daily commute to work, and many employers will suffer a corresponding increase in payroll taxes for 2012 and beyond, unless U.S. Congress acts before the end of 2011. The reduction will also restore a significant gap between the exclusion limit for employer-provided transit pass or vanpool benefits and qualified parking benefits, and creates an unintended economic subsidy that may influence some commuters’ choice to drive themselves to work over using mass transit.
Unless U.S. Congress acts before the end of 2011, the monthly tax exclusion for employer provided transit pass and vanpool benefits will shrink to $125 in 2012, from the current $230. This reduction could mean the loss of hundreds of dollars of annual tax savings for employees who use these benefits. Meanwhile, the monthly tax exclusion for employer provided parking benefits is scheduled to increase by $10 to $240 for 2012.
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