For those of you who use public transit, you will see your annual tax savings increase significantly… if you participate in an Employer-Provided pretax transit program.
Congress extended parity for pretax transit and parking benefits through the American Taxpayer Relief Act of 2012 (also known as “Fiscal Cliff” legislation). President Obama signed the legislation on January 2, 2013. The provision is retroactive to January 2012 and through 2013. The action increases the pretax transit benefit to $245 a month. This means that those who take mass transit or participate in van pools are eligible for the same amount as colleagues who drive and park.
Prior to this new legislation, the amount public transportation commuters were allowed to set aside in their pretax accounts each month was disproportionate to those who drove and parked. The monthly parking costs limit increased to $245 from $230 to account for the cost of living adjustment. Those who took public transportation were only allowed $125/mo. from $230, a decrease of $105.
For now, the limits are equal but the parity isn’t permanent. It is subject to future legislative action.