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Big Increase Coming in Pre-Tax Transit Benefit

The federal stimulus law contains a big boost in what transit riders can set aside from their paychecks tax free to pay their fares.

"Employers and employees will see the transit benefit allowance increase to $230 a month beginning March 1," Metro pointed out in a statement this afternoon. The current pre-tax limit is $120.

Transit riders in the Washington area are familiar with this through the SmartBenefits program. They can have their employers send the money for electronic transfer to their SmarTrip fare cards.

Starting next week, employers will be able to offer employees up to $230 a month -- $2,760 a year -- as a pre-tax payroll deduction. Metro riders can use the SmarTrip card to pay for trains, buses and parking at Metro lots and garages. They also are good on suburban buses.

About 400 federal agencies, 4,000 private employers and 189,000 employees participate in the SmartBenefits program, the transit authority said. Note that the cards hold up to $300 in value and no more. Metro should increase that limit now, in case people try downloading $230 onto a card that already has more than $70 remaining on it.

Metro is inviting employers to attend a free seminar on the SmartBenefits program on Wednesday, March 4, from 8:45 a.m. to noon at Metro headquarters, 600 Fifth St. NW. Employers can register for the seminar at this link.

Metro Resources:  Riding the System  |  Trip Planner   |   Map  |  Post Coverage

By Robert Thomson  |  February 25, 2009; 2:34 PM ET
Categories:  Metro , transit  
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I wonder how soon, if at all, the federal government will raise the transit subsidy for its employees. My monthly bill actually comes to $230, so this is perfect.

Posted by: nuttyturnip | February 25, 2009 3:24 PM | Report abuse

How long will it take Metro or the ubiquitous SmarTrip contractor to raise the upper limit on how much value a card can hold? $230/mo or roughly $55/week means that someone taking a long vacation could have a lot of money pile up on their card very quickly.

I think 500 is a fair amount.

Posted by: vtavgjoe | February 25, 2009 3:26 PM | Report abuse

Do we know if this will impact feds? Our current limit is $120 as a benefit.

Posted by: Anonymous8 | February 25, 2009 4:19 PM | Report abuse

I administer transit benefits for one of the 4,000 private employers providing SmartBenefit subsidies to its employees. Regardless of what the Federal government does so far as increasing actual subsidies, I know we simply can't afford to be hit with s surprise cost of $1,000/employee for the rest of this year. Until the money truck backs up to our loading dock, our benefits will stay put at $120.

Posted by: MelMoitzen | February 26, 2009 9:02 AM | Report abuse

Just because employers CAN raise their subsidies to $230 it does NOT mean they are required to. I would venture to guess that, in fact, very few will raise their subsidies.

Posted by: ceebee2 | February 26, 2009 9:17 AM | Report abuse

As the first sentence of the article says, the stimulus law boosts "what transit riders can SET ASIDE from their paychecks." The law allows employees to opt to take a portion of their pay as a pre-tax transit subsidy; the employer doesn't necessarily have to subsidize it. The federal government, and many private sector employers, choose to pay up to $120 as an extra tax-free bonus to employees, without deducting anything from employee paychecks, but an employer who couldn't afford to be that generous could simply give employees the option of receiving part of their pay in transit benefits. Like with flexible medical spending accounts, this doesn't cost the employer much money (some administrative costs) but gives the employee the advantage of getting part of their pay tax-free.

Posted by: DaDuZi | February 26, 2009 11:23 AM | Report abuse

Don't confuse employer subsidies with tax free transit benefits paid for by employees. The former can increase if the employers so desire. The latter will increase, so the employees might be able to offer more of this benefit tax free than they used to, but the employee still pays.

Posted by: thetan | February 26, 2009 11:25 AM | Report abuse

It may be authorized but it isn't appropriated. I will see a $5 increase in my smartbenefits next month. I will still pay $95 out of pocket.

Congress needs to mandate full transit benefits for Agency employees.

Posted by: anarcho-liberal-tarian | February 26, 2009 2:49 PM | Report abuse

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