GOP tax bill nixes incentive for company commuter benefits
Count commuters among the losers in the Republican tax bill that the House and Senate are expected to vote on next week.
The final bill agreed to by Republican negotiators and released late Friday eliminates the tax incentive for private employers that subsidize their employees' transit, parking and bicycle commuting expenses.
Currently, companies can provide parking or transit passes worth up to $255 a month to employees as a benefit to help pay for their commuting expenses, and then deduct the costs from their corporate taxes. That amount was set to increase to $260 a month on Jan. 1.
The reasoning behind the elimination of the deduction is that since the tax bill substantially lowers the corporate tax rate, smaller tax breaks that complicate the tax code are no longer necessary. Companies could still provide the parking and transit passes to employees, but they would no longer get the tax deduction. And employees who pay for their own transportation costs can still use pre-tax income.
The elimination of the subsidy has transit agencies worried that fewer commuters will opt for transit.
"It's clearly a negative for commuters who are spending a lot of money on public transportation," said Rob Healy, vice president for governmental affairs at the American Public Transportation Association. The employer subsidies are generally more lucrative for commuters than the ability to use pre-tax income for transportation costs, he said.
"The concern is that if employers can't write it off, they won't offer it. And if they don't offer it, it's a loss to the employees," Healy said. "It could ultimately hurt the ridership."
Businesses that provide their employees with $20 per month to cover the expense of commuting by bicycle would also no longer be able to write off the benefit under the tax bill. Without that incentive, the relatively few employers offering the benefit may discontinue it, said Ken McLeod, policy director for the League of American Bicyclists.
Bicyclists can use the benefit to offset the cost of a new bicycle or pay for helmets, locks, lights or maintenance like new tires, McLeod said. The money doesn't count toward employee earnings, he said.
Getting rid of the bicycle benefit, which was adopted in 2009, would save the government a relatively low $5 million a year, McLeod said. By comparison, the parking benefit costs the government about $7.3 billion a year in foregone taxes, according to a report by TransitCenter, a transit advocacy group.
The House version of the tax bill retained the benefit, but the Senate version eliminated it even though more than 1,500 bicyclists contacted members of the Senate Finance Committee to try to persuade them to keep the write-off, he said.
"Growth in commuting by bicycle contributes to reducing congestion, promoting good health and supporting a low-cost mode of transportation for all Americans," 20 bicycle, community, and sports and outdoor industry groups said in a letter to the committee's chairman, Sen. Orrin Hatch, R-Utah, and senior Democrat, Sen. Ron Wyden, D-Oregon.
What bothers bicyclists the most, McLeod said, isn't so much the money, but "just that it feels like the federal government doesn't support biking.
"I don't know if that is something the legislators meant to express," he said, "but that's something we're definitely hearing."