The Budget Control Act of 2012 includes a key benefit for public transit riders. Employers can now offer their employees up to $240 per month in commuting benefits tax-free. Prior to these negotiations, mass transit commuters were offered a $125 tax break.
“January 2013 is the perfect time for employers and employees in the greater Baltimore region to take a second look at enjoying the benefits of Commuter Choice Maryland,” said MTA Administrator and CEO Ralign T. Wells. “This tax-free commuter benefit puts money back into our riders’ pockets, will lessen congestion on our roads and will help clean up the air.”
Commuter Choice Maryland offers employers monthly pass distribution options that encourage employees to ride MTA Local Bus, Commuter Bus, Light Rail, Metro Subway, and MARC Train for less than full fare, saving money on daily commuting costs. The Commuter Choice Maryland program currently has about 400 employers registered with nearly 17,000 employees enjoying the benefits.
The federal benefit provides Maryland employers with three distribution options:
- The Employer Supported Option: Employer gives a pass or voucher with a maximum tax-free value of $240 per month to an employee at no cost to the employee. The employee rides mass transit or vanpools at little or no cost. By contributing to the commuting costs of the employee, the employer receives a federal and a state tax deduction as a regular business expense, and the employer is eligible to claim a Maryland Commuter Tax Credit for 50 percent of the amount of benefit given to the employee up to a maximum credit of $50 per employee per month.
- The Pre-Tax Salary Deduction Option: Employer contributes no money toward the employee’s commuting costs but allows the employee to use a pre-tax salary deduction to pay for a monthly pass. The cost of the pass is deducted tax-free (no federal, state and FICA deducted) from the employee’s gross salary.
- The Combination Option: Employer and employee share monthly commuting costs. For example: employer agrees to pay $32.00 toward the cost of a $64.00 monthly pass. The employee would pay the other half using a pre-tax salary deduction. Under this option, the employer receives all the tax benefits outlined in the first option and the employee is entitled to all of the tax benefits outlined in the second option.
Commuter Choice Maryland also offers the peace of mind of a Guaranteed Ride Home, and to transit riders who sign up for the free program, a tax credit for participating employers.
- Guaranteed Ride Home: For commuters who carpool, vanpool, take transit or bike or walk to work at least twice weekly and who are also signed up for Guaranteed Ride Home. Participants can get four free rides home from work annually in case of personal illness, family emergency or unscheduled overtime.
- Maryland Commuter Tax Credit: Maryland for-profit and non-profit employers can receive a 50 percent tax credit for the amount of benefit given to each employee.