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WASHINGTON—The tax-favored status of an employee benefit tapped by those who use mass transit to get to and from work would be boosted under a provision in highway funding legislation approved Tuesday by a Senate panel.
Under that provision, approved by the Senate Finance Committee on a 17-6 vote, employees would be able to reduce their taxable salaries by up to $240 a month for pay for mass transit expenses.
The current monthly maximum contribution is $125. The new higher limit would expire at the end of 2012.
There is some uncertainty about exactly when employees would be eligible to make the higher contributions.
A Joint Committee on Taxation description of the provision says the higher contribution amount would be available for all of 2012. But the description also says the provision would go into effect when the bill is signed into law. Legislative language is not yet available.
Congress on two prior occasions boosted the pretax contribution limit for mass transit expenses.
Under a provision in a 2009 economic stimulus law, employees were able 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 highway measure is expected to be merged into a broader transportation bill the Senate is expected to begin to consider next week.
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.