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Congressional inaction jeopardizes mass transit tax benefit

Posted On: Dec. 9, 2011 12:00 AM CST

Congressional inaction jeopardizes mass transit tax benefit

WASHINGTON—Without quick congressional action, the tax-favored status of an employee benefit tapped by those who use mass transit to get to and from work will be reduced starting Jan. 1, 2012.

Under a provision in a 2009 economic stimulus law, employees can reduce their salaries and make pretax contributions of up to $230 a month to pay for mass transit expenses.

Just prior to its expiration last year, lawmakers agreed to continue the tax break through the end of this year as part of a broader measure that extended a reduction in payroll taxes.

Observers say another extension of the mass transit tax break could be part of legislation to continue to payroll tax cut for one more year. But lawmakers have been unable so far to reach an agreement on a payroll tax cut, jeopardizing the mass transit tax break.

If Congress doesn't act, the maximum pretax contribution employees could make toward mass transit expenses, such as rail and bus passes, would fall to $125 a month, effective with the start of the coming year.