The American Taxpayer Relief Act of 2012 restores the pre-tax benefit for employees commuting to work on public transit from $125 to $240.
This benefit is basically a tax shelter for the dollars you spend on public transportation if your employer participates in the federal program. This is a one year extension and is tentatively set to last through December 2013. It can be implemented retroactively to January 1, 2012 with a bit of paperwork.
Interestingly, this $240 benefit has been available for people who drive to work and pay for parking. A bit counter productive as we try to encourage public transportation – but for today these benefits are now equal.
This is timely as employees we face increased payroll tax liability now that the Social Security tax level is returning to 6.2% and increased rates in public transportation. Employers now have an opportunity to help employees reduce their payroll tax liabilitiy through the transit benefits.