Transit Tax Issues Await Decisions on Extensions

02-Dec-2013

Congress has not yet addressed two very important transportation related issues – the expiration of the Commuter Tax Benefit and the Alternative Fuels Tax Credit. Discussions over whether to extend expiring tax provisions have to date been on hold due to interest within the Senate Finance and House Ways and Means Committees to advance comprehensive tax reform. However, with the end of the year fast approaching, some in Congress are pressing to advance a one-year extension of the expiring tax provisions. Whether Congress actually moves a “tax extenders” bill will be dependent to a degree on ongoing Budget conference and debate regarding the top-line budget numbers and other fiscal matters.

Action is needed before the end of the year for the transit commute benefit. Currently, commuters who use public transportation can receive the same tax-free transportation benefit from their employers as commuters who drive private cars and pay for parking—up to $245 per month. Unless Congress acts before the end of 2013, public transit and vanpool commuters will see their maximum allowable pre-tax and tax-free benefit plunge to $130 per month while parking will increase to $250 per month, per the most recent Internal Revenue Service Guidance.

The Alternative Fuels Tax Credit provides public transportation providers with financial assistance in the form of a tax credit, to assist with converting their bus fleets from diesel to compressed natural gas. Without this assistance, providers may be unable to continue moving towards a cleaner fuel source.


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