What's happening
This bill creates a tax credit for New York employers who newly provide federal qualified transportation fringe benefits to their employees.
Why it matters
Encourages employers to adopt commuter benefit programs. By offering a $50 tax credit per participating employee (up to $50,000 per employer), the bill incentivizes employers who have never provided federal transportation fringe benefits to start offering them, potentially increasing access to pre-tax commuter benefits across the state.
Targets new adopters only. The credit specifically applies to employers implementing these benefits for the first time, aiming to expand the overall number of workplaces supporting sustainable commuting rather than rewarding those already offering such programs.
May promote use of public transit and sustainable commuting. As federal qualified transportation fringe benefits typically include pre-tax payment for transit passes, vanpooling, or parking, broader adoption could encourage more employees to use public transportation or shared rides, potentially reducing traffic congestion and emissions.
Limits overall state expenditure. The program caps total annual tax credits at $5 million statewide, balancing the incentive for employers with a constraint to limit the fiscal impact on New York’s budget.
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Who cares
Headline styles
Give Businesses Transit Tax Breaks
Plain English, a few words. Used as the page title.
Sponsors
History
- Referred to investigations and government operations
- Referred to investigations and government operations
Full text
3 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
1406
2017-2018 Regular Sessions
IN SENATE
January 9, 2017
Introduced by Sens. CARLUCCI, AVELLA, KLEIN, SAVINO, VALESKY -- read twice and ordered printed, and when printed to be committed to the Committee on Investigations and Government Operations
AN ACT to amend the tax law, in relation to establishing tax credits for taxpayers which provide their employees with access to federal qualified transportation fringe benefits
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. The tax law is amended by adding a new section 43 to read as follows:
§ 43. Credit for provision of employee federal qualified transportation fringe benefits. (a) Allowance of credit. For the taxable year commencing on January first, two thousand seventeen, a taxpayer subject to tax under article nine, nine-A, twenty-two or thirty-three of this chapter shall be allowed a credit against such tax, pursuant to the provisions referenced in subdivision (d) of this section. The credit shall be allowed where a taxpayer has established and implemented federal qualified transportation fringe benefits for its employees during the taxable year in which such credit is claimed, and the taxpayer has not provided such benefits to its employees during any prior taxable year. The credit shall be equal to fifty dollars for each employee of the taxpayer who elected to participate in the taxpayer's federal qualified transportation fringe benefits program during the taxable year in which such program is established by the taxpayer. The amount of the credit granted to any taxpayer pursuant to this section shall not exceed fifty thousand dollars.
(b) Definition. As used in this section, "federal qualified transportation fringe benefits" means a qualified federal transportation fringe benefits program established and implemented by a taxpayer in accordance with section 132(f) of the internal revenue code and the regulations
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD01955-01-7
S. 1406 2
adopted pursuant thereto. Every such program shall be administered by a third party program administrator.
(c) Cross references. For application of the credit provided for in this section, see the following provisions of this chapter:
(1) Article 9: Section 187-t,
(2) Article 9-A: Section 210-B, subdivision 49,
(3) Article 22: Section 606, subsections (i) and (ccc),
(4) Article 33: Section 1511, subdivision (dd).
(d) Allocation of credit. The aggregate of tax credits allowed under this section, section one hundred eighty-seven-t, subdivision forty-nine of section two hundred ten-B, clause (xliii) of subparagraph (B) of paragraph one of subsection (i) and subsection (ccc) of section six hundred six and subdivision (dd) of section fifteen hundred eleven of this chapter shall not exceed five million dollars.
§ 2. The tax law is amended by adding a new section 187-t to read as follows:
§ 187-t. Credit for provision of employee federal qualified transportation fringe benefits. 1. Allowance of credit. A taxpayer shall be allowed a credit, to be computed as provided in section forty-three of this chapter, against the taxes imposed by sections one hundred eightythree, one hundred eighty-four and one hundred eighty-five of this article. Provided, however, that the amount of such credit allowable against the tax imposed by section one hundred eighty-four of this article shall be the excess of the amount of such credit over the amount of any credit allowed by this section against the tax imposed by section one hundred eighty-three of this article.
2. Application of credit. In no event shall the credit under this section be allowed in an amount which will reduce the tax payable to less than the applicable minimum tax fixed by section one hundred eighty-three or one hundred eighty-five of this article.
§ 3. Section 210-B of the tax law is amended by adding a new subdivision 49 to read as follows:
49. Credit for provision of employee federal qualified transportation fringe benefits. (a) Allowance of credit. A taxpayer shall be allowed a credit, to be computed as provided in section forty-three of this chapter, against the tax imposed by this article.
(b) Application of credit. The credit allowed under this subdivision shall not reduce the tax due to less than the higher of the amounts prescribed in paragraphs (c) and (d) of subdivision one of this section.
§ 4. Subparagraph (B) of paragraph 1 of subsection (i) of section 606 of the tax law is amended by adding a new clause (xliii) to read as follows: (xliii) Credit for provision of Amount of credit under subdivision employee federal qualified forty-nine of section two hundred transportation fringe benefits ten-B, or subdivision (dd) of under subsection (ccc) section fifteen hundred eleven
§ 5. Section 606 of the tax law is amended by adding a new subsection (ccc) to read as follows:
(ccc) Credit for provision of employee federal qualified transportation fringe benefits. Allowance of credit. A taxpayer shall be allowed a credit, to be computed as provided in section forty-three of this chapter, against the tax imposed by this article.
§ 6. Section 1511 of the tax law is amended by adding a new subdivision (dd) to read as follows:
(dd) Credit for provision of employee federal qualified transportation fringe benefits. (1) Allowance of credit. A taxpayer shall be allowed a
S. 1406 3
credit, to be computed as provided in section forty-three of this chapter, against the taxes imposed by this article.
(2) Application of credit. The credit allowed under this subdivision shall not reduce the tax due to less than the minimum tax fixed by paragraph four of subdivision (a) of section fifteen hundred two of this article or by section fifteen hundred two-a of this article, whichever is applicable.
§ 7. This act shall take effect immediately.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the tax law, in relation to establishing tax credits for taxpayers which provide their employees with access to federal qualified transportation fringe benefits
Purpose
To provide businesses with a tax credit as an inventive to offer their employees federal qualified transportation benefits.
Summary of provisions
Section 1 adds a new section 42 to the tax law. This section gives filers who file under articles nine, nine-A, twenty- two, or thirty-three of the tax law a credit against such taxes in tax year 2016. The credit is equal to $50 for each employee who elects to participate in a qualified fringe transportation benefit program offered by the employer, as defined by section 132(f) of the Internal Revenue Code. This credit can be claimed only by an employer who establishes such a program on the tax year they claimed the credit for without having offered such a program previously. The maximum credit any tax payer can claim is $50,000. The maximum amount which can be claimed for this credit by all filers is $5 million.
Read the full memo (901 words)
Section 2 adds a new sections 187-t of the tax law to establish the credit explained above in article nine of the tax law.
Section 3 amends section 210-b of the tax law by adding a new subdivision 49 to establish the credit explained above in article nine-A of the tax law.
Section 4 amends subparagraph (B) of paragraph 1 of subsection (i) of section 606 of the tax law by adding a new clause (xli) to establish the credit explained above.
Section 5 amends section 606 of the tax law by adding a new subsection (ccc) to add this credit to the list of credits that can be claimed under this section of law.
Section 6 amends section 1511 of the tax law by adding a new subdivision (dd) to establish the credit explained above.
Section 7 establishes an immediate effective date.
Justification
Every day over 8.9 million New Yorkers commute to work. Commuting costs can quickly add up and eat up an important chunk of an individual's annual budget. New York state is unique in the number of employees who commute using public transportation. According to the Bureau of Labor, in the 2011-2012 period the average expenditure in transportation in the New York Metropolitan statistical region was around $8,000 a year, with the expense on mass transit being an average of $1,142.
In order to help pay for commuting expenses, federal tax law allows employers to offer a benefit that sets aside pre-taxable income with which employees can pay for eligible commuting expenses. Each year the IRS sets the limit for how much income an employee can set aside to pay for qualifying transportation expenses. For tax year 2014, employees can set aside up to $250 a month in income to pay for qualifying parking expenses related to an individual's parking expenses at work, and up to $130 a month to pay for transit expenses like paying for mass transit or commuter van service. An employee may also receive a $20 a month for qualified bicycling expenses. The income that is set aside each month is exempt from all taxation, including payroll taxes and federal, state, and local income taxes. This means that the employees tax bill is lowered by hundreds of dollars, with the specific savings determined by how much income is set aside and the income tax status of the employee. The employer also saves money, since the salary put side is exempted from the employer share of payroll taxes. Unfortunately, even though employers can save money as well, according to the Bureau of Labor survey of employee benefits only 8% of employees in the Northeast region have access to this benefit. This declines to only 3% of employers with under 100 employees offer this benefit.
Businesses provide this fringe benefit by working with third party program administrators who administrate the program. There are some minor administrative fees that employers pay, as well as paperwork to be filed in order to begin offering the benefit. While these administrative costs would be easily recouped in the vast majority of cases just from the tax benefit the employers get plus ancillary benefits such as improving employee satisfaction, they can lead to some employers choosing not to offer these benefits. The tax credit proposed is meant to give businesses an incentive to establish these programs and offer them to their employees by more than covering whatever up-front costs they would have to deal with in establishing the program. If employers in New York make full use of this credit, 100,000 workers in New York would gain access to this benefit, and see their commuting costs cut. Those businesses who establish these Programs would then reap the benefits in following years.
Legislative history
2015-16: S2703A - Investigations and Government Operations S.6737 of 2014
Fiscal implications
The credit amount to be offered is capped at $5 million. Since the benefit allows employees to deduct income set aside for qualified expenses from taxes, there would be an additional associated costs to the state in the form of lost income tax revenue. If the program is fully utilized, we estimate there could be a concurrent loss of $14 million in income tax revenue to the State.
Legislative date
This act shall take effect immediately.
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