Most Americans spend more on driving than on health care, education, or food. In fact, a recent study found that the average family devotes nearly 20% of its annual income to getting around, second only to housing. And of course, working families spend the most – sometimes more than one-third of their income goes to transportation. The vast majority of that spending, 98%, is for the purchase, operation, and maintenance of automobiles. But in areas where transit use is prevalent, the percentage of household dollars dedicated towards transportation costs is significantly less.

TEA 21 made great strides in addressing the tax laws which still encourage people to drive alone to work; changes to the tax code now allow employers to give their workers up to $110 per month to cover public transportation commuting costs as a tax-free benefit. Alternatively, employers can allow employees to pay for transit commuter benefits with payroll deductions, or they can share these costs with employees by paying part of the commuter benefit and allowing employees to pay the remainder using pre-tax dollars. Under this unique program, everyone wins. Employees do not pay federal income tax on transit commuter benefits, and employers can deduct the costs for providing such benefits, and avoid payroll taxes on the benefits, regardless of who pays.

Unique Benefit

As the largest labor organization representing transit workers in the U.S., ATU has recently advised all AFL-CIO unions about the changes in the law so that more working families can take advantage of this unique fringe benefit, which provides a real financial incentive to both employers and employees to get people to travel to work by transit, arriving safe, rested, on-time, and with the ability to be far more productive.