Why the IRS Awards Driving Over Transit for 2012

by Ozzie Zehner

Glorious Parking (photo by Faris Ali)

Why the IRS Awards Driving Over Transit for 2012

By Ozzie Zehner

Starting on January 1, 2012, the IRS will reduce the allowable pre-tax contributions to transit riders while increasing benefits for drivers – an economic tax subsidy that will end up supporting car culture with twice the gusto of transit.

The IRS announced the following limits for pre-tax contributions and reimbursements on 2012 Commuter Benefits Accounts:

  • Transit pre-tax contributions: Decreased from $230 to $125 per month
  • Parking pre-tax contributions: Increased from $230 to $240 per month

History: The American Recovery and Reinvestment Act of 2009 (ARRA) increased the monthly pre-tax reimbursement limit for Commuter Benefit Transit accounts temporarily from $120 to $230. That limit expires on December 31, 2011.

Status: Congress has not acted to extend the current deadline.  Unless they take action by January 1, 2012, the monthly pre-tax contribution and reimbursement limits for transit accounts will drop to $125, roughly half the limit for drivers.

Shameless Plug: Read about hidden car culture subsidies in my upcoming book: GreenIllusions.org