Tax Credit on Public Transportation
There are many reasons to take advantage of public transportation. Some find it less stressful to not drive and get to read the paper while riding the subway, some appreciate that using public transportation is a way to conserve fuel, and some simply cannot afford the cost of owning and maintaining a car. People who ride the bus to work may also save money on their taxes.
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American Recovery and Reinvestment Act
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The American Recovery and Reinvestment Act that President Barack Obama signed into law in 2009 nearly doubled the amount of tax incentives for people who take the bus to work. The most money that can be set aside has gone up to $230 per month.
Public Transportation
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Workers who ride public transportation to work may ask their employer to set aside pretax dollars from their paychecks. If it costs Mrs. Smith $100 per month to ride the subway to work and back, her employer sets aside $100 per month from Mrs. Smith's paycheck to pay for the transit. Mrs. Smith does not pay tax on that money. If Mrs. Smith spends $300 per month riding the subway to work and back, she may only have her employer set aside $230 per month, since $230 is the limit.
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Partner With Your Employer
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Workers with like-minded employers may partner with the employer to pay for public transportation costs. The employer may pay for the employee's transportation and receive tax breaks from the government for doing so. In this scenario, the worker rides the bus to work and back for free.
Ride Your Bicycle
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Workers who ride their bicycles to work and back at least three days per week may claim a $20-per-month tax credit through their employer. The employer must offer the commuter credit program. Workers interested in receiving this credit should discuss the possibility with their employer.
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