Tax benefits for mass-transit commuters set to drop The change pits mass transit users against drivers, who by contrast will see an increase in their monthly parking benefit in the new year, from $245 to $250. "This is the biggest disparity between the two components of the commuter benefit that we have ever seen," said Natasha Rankin, executive director of the Employers Council on Flexible Compensation. For those who rely on mass transit, where you also have increasing costs, this is a double hit. The lower benefit has ramifications for commuters across the country, but particularly in the Washington metro area, where between 400,000 and 500,000 people benefit from the tax benefit, estimates WageWorks, the employee benefit administrator. Advocates say the benefit enjoys broad, bipartisan support. But it's also attached to a larger bill filled with seemingly random tax benefits that have already expired or are set to phase out at the end of the year. These so-called extenders include everything from research and development tax credits to breaks for domestic TV and movie production. With lawmakers saying they'll pick up the extenders bill sometime in the first quarter of next year, advocates and industry observers say it could take months for transit users to see their benefits restored to their current level. "Unfortunately many people will lose not only the January, February and March tax break but probably into April, too," said Dan Neuburger, president of commuter services at WageWorks. Because of the way that the commuter benefits work, you have to do the deduction in advance. If Congress does something in March...you're going to lose basically a third of the benefit for 2014. Area commuters, many of whom spend substantial amounts traveling long distances to their jobs, are often sensitive to any decrease in the cap on pre-tax spending. Metro officials say that in 2012, when the system instituted higher fares and the transit tax benefit dropped to $125 a month, ridership fell 2.7 percent, or 9.5 million. This isn't the first time the size of the transit tax benefit has hung in the balance at the eleventh hour. Last year, it squeaked by in a bill that resolved the standoff over the so-called fiscal cliff. A number of factors this year have made the fate of the extenders bill--including those benefits for transit users--again precarious. For one, lawmakers have been trying to gin up support for broader tax reform, with some on Capitol Hill insisting the extenders should be handled along with the rest of the tax system, not separately. But now with one of the leaders of that effort, chairman of the Senate Finance Committee Sen. Max Baucus (D-Montana), on his way out to potentially become the next U.S. Ambassador to China, the timetable for the extenders has accelerated to sometime in the first three months of 2014. The upshot is that commuters who take full advantage of the current cap may not see their benefits raised back until May at the earliest, said Neuburger. Employers, who must elect to participate in the commuter program for their workers to benefit, also stand to lose money. When employees choose to deduct pay before taxes to cover mass transit, employers end up paying less in payroll taxes, too. The tax benefit for commuters has been in place since 1998. From the beginning, those who used mass transit saw lower benefits than those who drove and parked. The economic stimulus package in 2009 changed all of that, bringing the monthly amount for transit users to $230, in line with drivers. In 2012, however, that parity lapsed, and the transit cap fell to $125. On Jan. 1, 2013, in its resolution to stave off the fiscal cliff, Congress brought the amount back up to $245 and retroactively tried to patch up the savings that were lost the previous year. But plan administrators say it was difficult to figure out in 2013 what employees would've used if the cap had been higher in 2012. "It's virtually impossible," said Neuburger. It's a huge administative burden to then go figure out retroactively what someone's commute would've cost. So companies just didn't want to do it. They lost the tax savings, and the employees lost the tax savings. Advocates say that the best solution is to make the level of savings given to transit users the same as drivers--permanently. Last week, Sen. Charles Schumer (D-N.Y.) made one last attempt to pass a bill that would avert the drop in transit benefits. The effort failed.