Relates to establishing a transportation benefits program

Title of bill

An act to amend the labor law and the tax law, in relation to establishing a qualified transportation fringe benefits program

Purpose or general idea of bill

The purpose of this bill is to protect employees from losing their state monthly commuter tax benefits due to Congressional inaction and to require qualifying employers to offer employees an option to participate in the commuter tax benefit program.

Summary of specific provisions

Section 1 Amends the New York state transportation law by adding a new Article 33.

Section 2 amends subsection of section 612 of the tax law by adding a new paragraph 44.

Section 3 establishes the effective date.

Justification

Federal law authorizes employees of qualifying employers to take advantage of a commuter benefit program, and New York mirrors that benefit program. The benefit program allows employees to set aside part of their pre-tax wages to pay costs of commuting to work on public transit. In some cases, the pre-tax transportation set-aside can save employees up to 40 percent of annual commuting costs. Employers also save money by reducing pay-roll tax liability. Encouraging commuters to take public transit is also important policy to help decongest urban roads and preserve the environment.

Despite these advantages, the commuter benefit program suffers from two important legislative problems. First, the federal program requires Congress to annually reauthorize increases to the maximum transit benefit, something it has failed to do in recent years. Because the state's program mirrors the federal program, commuters have taken a significant hit to both their state and federal pre-tax benefits during years when Congress fails to act. Secondly, although many qualifying employers offer the benefit program, others do not. Therefore many employees who would both qualify for and benefit from the program cannot even participate.

This bill requires qualifying employers in the state to offer the commuter benefit program to their employees so that all qualifying employees can take advantage. The bill also protects commuters from losing their state monthly pre-tax benefits because of Congresses inaction. Overall, this bill represents an important step in making sure that commuter benefit program reliably reaches all who can participate.

Prior legislative history

None.

Fiscal implications

None to the state.

Effective date

This act shall take effect immediately, provided, however, that section one of this act shall take effect on the one hundred twentieth day after it shall have become a law; provided, further, that section two of this act shall apply to taxable years beginning on and after January 1, 2018.