Congress Dec. 18, delivered a huge win for Metra commuters who participate in a pre-tax transit benefit plan, nearly doubling the amount of money that can be set aside each month so they can now save as much as $1,100 a year.
Under legislation that passed the House yesterday and the Senate today, Americans will be able to set aside $255 in pre-tax dollars each month in 2016 to spend on public transportation, up from the current $130 a month. Commuters save money through the program because they don’t have to pay state and federal taxes on the dollars they spend on public transportation, up to the new limit. (The savings come through their payroll, not at the point of Metra sale.)
“Participating in a transit benefit program is like getting three months of free transportation each year,” said Metra Executive Director/CEO Don Orseno. “And by making public transportation more affordable, this increase can potentially boost Metra ridership. We would like to thank the entire Illinois congressional delegation for supporting this important and significant legislation, particularly Senators Dick Durbin and Mark Kirk and Representatives Bob Dold, Danny Davis, Randy Hultgren, Dan Lipinski and Peter Roskam.”
For example, a customer commuting from Route 59, Metra’s busiest station outside of downtown, will pay $202 for a Zone G monthly pass in 2016 (starting in February). If that customer uses pre-tax dollars to buy the pass, he or she will save $7.58 in Illinois taxes, $15.45 in federal FICA taxes and $30.30 to $50.50 in federal taxes (depending on the tax bracket), for a total savings of $53.33 to $73.53 per month. That means the $202 monthly pass could effectively cost as little as $128.47. Other examples:
- Zone C Monthly Pass ($138)Cost with transit benefit: $88 to $102; New net savings: $432 to $600 per year or $36 to $50 per month.
- Zone D Monthly Pass ($159.25)Cost with transit benefit $101 to $117; New net savings $507 to $699 per year or $42.25 to $58.25 per month
- Zone E Monthly Pass ($173.50)Cost with transit benefit $110 to $127; New net savings $558 to $762 per year or $46.50 to $63.50 per month
- Zone F Monthly Pass ($187.75)Cost with transit benefit: $119 to $138; New net savings: $597 to $825 per year or $49.75 to $68.75 per month
According to Metra’s most recent data, nearly 52 percent of its 150,000 daily riders use pre-tax transit benefits to help pay for their commuting costs. Metra estimates that the average customer using a transit benefit program will save more than $515 a year in 2016. If you multiply that number by the estimated 78,000 customers currently enrolled in a transit benefit program, Metra customers will save more than $40 million in 2016 – a 25 percent increase.
The higher threshold will now cover the cost of a monthly pass from all but the two farthest Metra fare zones. For those last two zones, customers can combine the $255 in pre-tax dollars with another form of payment, such as a credit card, to buy their monthly pass and still see significant savings. Metra has a split-payment feature on its website and through the Ventra App to facilitate this process.
To participate in a transit benefit program, the benefit must be offered by the commuter’s employer. Similar to health savings accounts, yet far more flexible, the programs allow employees to opt in and out according to their plan specifications. Employers also save money on payroll taxes and they may recognize improvement in employee retention and employee morale.
For more information about pre-tax transit benefits, referrals to qualified plans or other transit support, companies should call 312.322.6326 or email [email protected].
