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Prospects for boost in mass transit tax break dim

Prospects for boost in mass transit tax break dim

WASHINGTON—The prospects for congressional action to boost the tax-favored status of an employee benefit tapped by those who use mass transit to get to and from work continue to dim.

While the Senate Finance Committee previously approved a highway funding bill that includes a provision that would allow employees to reduce their salaries by up to $240 a month through the end of 2012 to pay for mass transit expenses, Senate Democratic leaders have been unable to muster sufficient support to bring up the broader bill for a vote by the full Senate.

In addition, another possible vehicle for the mass transit boost officially ended Wednesday when President Barack Obama signed a measure that extends a temporary reduction in the payroll tax rate through the end of 2012. Backers of a higher mass transit tax break had hoped that a transit tax subsidy provision would be attached to the payroll tax reduction bill.

The history of the higher mass transit tax break goes back to 2009, when lawmakers approved an economic stimulus measure that allowed employees to reduce their taxable salaries by up to $230 a month to pay for mass transit expenses. At that time, the maximum contribution was $120 per month.

Then, just prior to its expiration in 2010, lawmakers agreed to continue the higher mass transit tax break through the end of 2011 as part of a broader measure that temporarily reduced payroll taxes. That higher limit, though, expired at the end of last year.

The current monthly maximum contribution is $125.

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