Mass Transit Benefit Will Drop In 2014

Orhan Cam/Shutterstock.com

The mass transit tax benefit used by thousands of federal employees will drop significantly in 2014, while the maximum parking benefit will increase by $5.

Beginning on Jan. 1, 2014, commuters will be able to use up to $130 in monthly pre-tax dollars to subsidize their mass transit costs -- $115 less than the current maximum of $245 per month. The parking benefit will increase to $250 per month next year, up from the current $245 cap. Something similar happened in 2012, when the cap on the mass transit benefit was $125 per month, and the limit on the parking benefit was $240 per month.

The upcoming changes are a result of the 2012 American Taxpayer Relief Act, also known as the fiscal cliff deal. That law restored parity between the mass transit and parking benefits, but only for 2013. The mass transit increase for 2013 was temporary, which is why the cap will be smaller in 2014; the change for the monthly parking limit is a permanent provision in the law so the annual cost-of-living adjustment will boost the maximum benefit to $250 per month next year.

Congress would have to pass legislation to change the 2014 mass transit cap of $130 starting in January.

The change affects all commuters, not just federal employees. Employers who offer the tax benefit, including the federal government, do not dole out the benefits equally. Just as feds use a variety of transportation modes to get to work -- including car, rail, vanpool, ferry and bus -- agencies allocate transit and parking benefits slightly differently. And perhaps most important, the value of a mass transit subsidy directly correlates to the reliability and availability of public transportation in a particular area. As for parking perks, when an agency offers them, it typically comes down to supply and demand.

Agencies currently can provide up to $245 per month in transit benefits, which include subsidies for public transportation and parking, but not everyone receives the maximum amount, or even a full menu of options. Employees are eligible to receive a tax-free transit subsidy that is equal to, but must not exceed, the amount they spend on their commute; if they don’t use the full amount in any given month, the surplus flows back to the government. And an individual cannot receive both a transit and parking subsidy.

The Transportation Department, through its TRANServe program, offers guidance on how the mass transit benefit works, while the Internal Revenue Service handles tax regulations. As long as agencies adhere to the maximum monthly cap, stay on the right side of the IRS and ensure employees don’t misuse the subsidy, they retain a fair amount of flexibility in how they allocate the benefit.

(Image via Orhan Cam/Shutterstock.com)

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec
 
 

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Forecasting Cloud's Future

    Conversations with Federal, State, and Local Technology Leaders on Cloud-Driven Digital Transformation

    Download
  • The Big Data Campaign Trail

    With everyone so focused on security following recent breaches at federal, state and local government and education institutions, there has been little emphasis on the need for better operations. This report breaks down some of the biggest operational challenges in IT management and provides insight into how agencies and leaders can successfully solve some of the biggest lingering government IT issues.

    Download
  • Communicating Innovation in Federal Government

    Federal Government spending on ‘obsolete technology’ continues to increase. Supporting the twin pillars of improved digital service delivery for citizens on the one hand, and the increasingly optimized and flexible working practices for federal employees on the other, are neither easy nor inexpensive tasks. This whitepaper explores how federal agencies can leverage the value of existing agency technology assets while offering IT leaders the ability to implement the kind of employee productivity, citizen service improvements and security demanded by federal oversight.

    Download
  • IT Transformation Trends: Flash Storage as a Strategic IT Asset

    MIT Technology Review: Flash Storage As a Strategic IT Asset For the first time in decades, IT leaders now consider all-flash storage as a strategic IT asset. IT has become a new operating model that enables self-service with high performance, density and resiliency. It also offers the self-service agility of the public cloud combined with the security, performance, and cost-effectiveness of a private cloud. Download this MIT Technology Review paper to learn more about how all-flash storage is transforming the data center.

    Download
  • Ongoing Efforts in Veterans Health Care Modernization

    This report discusses the current state of veterans health care

    Download

When you download a report, your information may be shared with the underwriters of that document.