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Transportation

Metro riders’ tax benefits increase under ‘fiscal cliff’ bill

By Dana Hedgpeth,January 02, 2013

View Photo Gallery - : ‘Fiscal cliff’ deal passes: Public-transit users will be able to…

Metro riders who put aside pretax income to cover their commuting costs will benefit from the bill approved by Congress this week to resolve the “fiscal cliff” standoff.

Public-transit users, who saw the cap reduced to $125 a month last year (from $230 in 2011) will now be able to set aside up to $240 a month, the same amount that people commuting by car can put aside for parking.

With the drop in tax benefits for transit riders, Metro’s fare increases and ongoing work to fix the aging system, some commuters have been choosing to drive instead, some transit advocates say.

For months, they have been lobbying Congress to raise the public transit benefit to match the amount that can be set aside for parking, and the new bill does that.

Metro’s ridership was down 4.5 percent from July through October compared with the same time period in 2011, and a Metro spokesman said the drop was due to the lower tax benefit as well as the fare increases and the closure of the system for almost two days after Hurricane Sandy.

“When tax benefits are more favorable for people who commute by car, people weigh their options,” said the spokesman, Dan Stessel. “They ask themselves, ‘Is it economically feasible for me to take transit?’ ”

But there’s a bit of confusion about the new bill. Congress said the transit benefits can be applied retroactively for 2012, but how that can be done is unclear.

Stessel said it’s up to the companies that manage the benefits to figure it out. About 253,000 area employees are registered for Metro’s SmartBenefits program, which allows transit benefits to be assigned directly to SmarTrip cards. About 103,000 of these commuters work in the private sector and 150,000 for the federal government.

“The million-dollar question is how will this work?” said Paul Dean, vice president of TransitCenter, a transit advocacy group. Because transit benefits are often distributed through third-party companies such as WageWorks, he said, “there is currently no system in place to claim that money in an easy way.”