What's happening
This bill allows New Yorkers to exclude certain qualified transportation fringe benefits from state income tax, restoring pre-2019 federal treatment.
Why it matters
Restores state tax breaks for commuter benefits. By allowing New Yorkers to exclude certain qualified transportation fringe benefits (like transit passes and vanpooling) from state income tax, this bill encourages the use of mass transit and employer-sponsored commuting options, which were previously incentivized before a 2018 federal tax change.
Aligns state tax code with pre-2019 federal rules. The bill specifically references the federal tax code as it existed before January 1, 2019, ensuring New Yorkers continue to receive tax benefits that Congress eliminated at the federal level, thereby maintaining local support for sustainable commuting habits.
Guarantees a minimum benefit threshold. Regardless of future federal changes, the bill sets a floor of $175/month for the tax-exempt status of these commuting benefits, protecting workers from losing significant tax savings if the federal limit drops.
Potentially impacts employer-provided transit programs. By making commuter benefits tax-exempt again at the state level, the bill could incentivize more employers to offer, and more employees to use, sustainable transportation options, with downstream effects on congestion, air quality, and urban transit systems.
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Who cares
Headline styles
Tax Break for Transit Benefits
Plain English, a few words. Used as the page title.
Sponsors
Senator · Senate District 38
1 Co-sponsor
History
- Referred to budget and revenue
- Returned to senate
- Died in assembly
- Referred to ways and means
- Delivered to assembly
- Passed senateVote 60–0
- Ordered to third reading cal.345
- Committee discharged and committed to rules
- Referred to budget and revenue
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Exclude Transit Benefits from Taxes
In Assembly Committee · Ways And Means · Sponsor Kenneth Zebrowski
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
3537
2019-2020 Regular Sessions
IN SENATE
February 8, 2019
Introduced by Sen. CARLUCCI -- read twice and ordered printed, and when printed to be committed to the Committee on Budget and Revenue
AN ACT to amend the tax law, in relation to qualified transportation fringe benefits
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Subsection (c) of section 612 of the tax law is amended by adding a new paragraph 44 to read as follows:
(44) For taxable years beginning after December thirty-first, two thousand eighteen the amount of qualified transportation fringe benefits included in federal adjusted gross income, to the extent that such qualified transportation fringe benefits would have been excluded from gross income pursuant to paragraph five of subsection (a) of section one hundred thirty-two of the internal revenue code had the flush sentence of paragraph two of subsection (f) of section one hundred thirty-two of the internal revenue code that was in effect on December thirty-first, two thousand eighteen continued in effect after December thirty-first, two thousand eighteen; provided, however, that if subparagraph (A) of paragraph two of subsection (f) of section one hundred thirty-two of the internal revenue code is amended so that for any month the dollar amount in effect under such subparagraph (A) is greater than the dollar amount in effect under subparagraph (B) of paragraph two of subsection (f) of section one hundred thirty-two of the internal revenue code for the same month, the flush sentence of paragraph two that was in effect on December thirty-first, two thousand eighteen shall be deemed to provide that the dollar amount in effect for subparagraph (B) shall be applied as if the dollar amount therein were the same as the dollar amount in effect for such month under subparagraph (A). Notwithstanding the foregoing, if, pursuant to this paragraph, the amount that would be in effect for any month under subparagraph (A) or (B) of paragraph two of subsection (f) of section one hundred thirty-two of the internal revenue code is
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD06298-01-9
S. 3537 2
less than one hundred seventy-five dollars, subparagraphs (A) and (B) shall be applied as if the dollar amount in effect for such month under such subparagraphs was one hundred seventy-five dollars.
§ 2. 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 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 44 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 pretax 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. The result was that 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 transit benefit in 2011, commuters saw both their state and federal benefits cut almost in half in 2012. Congress did finally approve an extension of the transit benefit at the eleventh hour in 2012 but, once again, it expired at the end of 2013. To date, Congress has not authorized a new extension of the transit benefit, and it does not appear likely that they will do so.
Washington's lack of action not only raised costs for commuters, it gave them new incentives to avoid mass transit all together. Commuters who drive in a carpool 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 commu- ters who drive to work had their parking benefit increase to $240 a month in 2012 while mass transit riders' benefits were cut by nearly half. This disparity provided an incentive for commuters to drive to work and not use mass transit, increasing congestion and auto emissions. This legislation is needed to protect commuters from losing their New York State monthly pre-tax transit benefit and to create parity on the state level between state pre-tax parking and transit benefits in the event that Congress again fails to act.
Legislative history
2017-18: S1036/A1430 - PASSED SENATE/ways and means 2016: passed the Senate (2013A)- A9266 - ways and means 2015: Passed the Senate 2014: Passed the Senate (S.6397-A) 2013: Passed the Senate (S.770-13) 2012: Passed the Senate (S.2728C/A.61758) 2011: Passed the Senate (S.2728B/A.6175A)
Fiscal implications
Prior to December 31, 2011 this income was not taxed by the State, therefore there is no cost to the State.
Effective date
This act shall take effect immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.