Subtracts from federal adjusted gross income qualified transportation fringe benefits

15 Co-sponsors

• Tony Avella
• David Carlucci
• Martin Malavé Dilan
• Martin J. Golden
• Kemp Hannon
• Owen H. Johnson
• Jeffrey D. Klein
• Kenneth P. LaValle
• Betty Little
• Jack M. Martins
• Suzi Oppenheimer
• Michael H. Ranzenhofer
• Diane J. Savino
• Toby Ann Stavisky
• Lee M. Zeldin

BILL NUMBER:S2728C REVISED 01/25/12

Title of bill

An act to amend the tax law, in relation to qualified transportation fringe benefits

Purpose

To restore the New York State commuter pretax deduction benefit.

Summary of provisions

Section 1. Amends subsection (c) of section 612 of the tax law by adding a new paragraph 39 to make permanent the New York State pretax deduction benefit for commuting expenses for employees.

Section 2. Effective date.

Justification

Federal law permits employers to allow their employees to set aside a portion of their pre-tax wages to pay for transit, vanpool fares, and parking. In 2009, Congress approved an increase in the maximum transit benefit ($230/month), but required re-approval of the increase on an annual basis. An extension was approved in 2010, but Congress did not reauthorize another extension by the December 31, 2011 deadline. As a result, commuters' mass transit tax benefits were cut from $230 to $125 a month. New York State mirrors this benefit, thus with Congress' failure to re-authorize the current transit benefit, commuters are seeing both their state and federal benefits cut almost in half.

Washington's lack of action not only raises costs for commuters, it gives them new incentives to avoid mass transit all together. Commuters who drive in a car pool are allowed a similar pre-tax benefit to help offset parking costs under federal law. Unlike the pre-tax transit benefit, that law is permanent and indexed to inflation. This means that commuters who drive to work had their parking benefit increase to $240 a month while mass transit riders' benefits were cut by nearly half. This disparity provides an incentive for commuters to drive to work and not use mass transit, increasing congestion and auto emissions.

This legislation would fully restore the state' monthly pre-tax transit benefit which was cut when the federal government did not approve an extension by the December 31, 2011 deadline. It would also create parity between the current federal and state pre-tax benefits which help offset parking costs for commuters who drive. That benefit increased to $240 on January 1st.

Legislative history

2011: (S.2728-B/ A.6175-A) Passed the Senate

Fiscal implications

Prior to December 31, 2011 this income was not taxed by the State, therefor there is no cost to the State.

Effective date

Immediately