Is My SEPTA Pass Tax Deductible?

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Remember to keep reciepts and records to prove your eligibility for a tax break.
Remember to keep reciepts and records to prove your eligibility for a tax break. (Image: BananaStock/BananaStock/Getty Images)

The Southeastern Pennsylvania Transportation Authority, or SEPTA, connects commuters in Philadelphia and its suburbs to employers. But commuting on public transit can be pricey. A monthly Transpass, good for any rides within city limits, cost $83 at time of publication. Passes that allow rides from the farthest suburbs to get into the city cost $191 per month. While commuting costs generally are not tax deductible, there are programs under which public transit users can reduce their tax burden.

TransitChek

The Delaware Valley Regional Planning Association runs a program called TransitChek that allows employers to purchase vouchers, which range in value from $15 to $65, for public transit through SEPTA or other area public transit agencies. Employees can then use the vouchers to purchase monthly or weekly passes, or tokens. Employers can offer up to $230 per month in vouchers to each employee as a tax-free benefit.

Buying and Sharing

Employers can but do not have to give employees the vouchers as part of a compensation package. Instead, employees can purchase them for face value of a voucher. Companies and employees can also share the fare. Under such an arrangement, the employer may pay a portion of the face value of the voucher.

Pre-Tax

Employees who purchase the vouchers from their employer can do so with pretax income. This has the effect of acting as a tax deduction because it lowers adjusted gross income. The maximum payroll deduction is $230 per month. Purchasing the vouchers with pretax dollars and using the full amount of the voucher can save a considerable amount of money. For employees in the 10 percent tax bracket, the savings amounts to $230 per year. Employees in the highest tax bracket can save more than $1,000 for 2011.

Expenses

Employees who are required to purchase SEPTA tokens or passes to travel from work to the field or other offices may be able to deduct that expense as an unreimbursed business expense. There are some criteria that a taxpayer must meet before being able to claim this expense. The travel cannot be from home and employees must be visiting clients or other offices. It is similar to a deduction taken for the use of a car.

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