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Better than a Gift Card..

December 21, 2015

22 RTA 0646

We all got a holiday gift we don't want to return last week.  We wrote in this blog about the passage of the Protecting Americans from Tax Hikes (PATH) Act of 2015. We worked hard to bring it to fruition and we were thrilled to see it pass.  Crain's Chicago Business' Greg Hinz agrees. We wanted to pass along  his story, which  quotes RTA Chairman Dillard.  We agree. This is way better than a gift card!!

Ron Cogswell/
Photo by Ron Cogswell/

Chicago-area transit riders are receiving an early Christmas gift from Washington–a big one.

Under terms of the budget and tax-break deal Congress completed over the weekend, those who use transit or van pool again will be entitled to the same exclusion that parkers received, so long as it's run through their employer. And the exclusion–money spent will not be taxed–will be permanent, and be adjusted up over time to match inflation.

That means the benefit immediately will leap from a maximum of $140 a month to $250, going up to an estimated $255 in 2016, all U.S. income-tax free.

Restoring "parity" between tax breaks or those who drive and park and those who take the bus, train or van pool had been a major priority of local politicians on both sides of the aisle, including Democratic Rep. Dan Lipinski and Republican Bob Dold, as well as the Chicago Metropolitan Agency for Planning and the Regional Transportation Authority.

"I am grateful to our congressional delegation for allowing transit riders families to keep a little more of their cash this holiday season," RTA Chairman Kirk Dillard said in an email. Illinois employers benefit too via lower payroll taxes. It would have been poor public policy to have encouraged more people to clog our expressways by driving cars as opposed to using convenient mass transit."

Until 2014, auto and transit exclusions had been the same. But short of cash to pay for highway work, dominant House Republicans cut the transit figure down to $140. Now Democrats and some urban Republicans, whose constituents take transit, have been able to relink the two parts of a new bill making dozens of tax breaks permanent.

The transit break will cost the U.S. treasury about $1.7 billion over the next decade, according to CMAP, and the entire extender bill $629 billion over the same period. Funding for the entire package will come out of general federal revenues with no new taxes or offsetting spending cuts, at least for now. That's the Washington way.

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