Subtracts from federal adjusted gross income qualified transportation fringe benefits.
BILL NUMBER:S6397 REVISED 4/25/14
TITLE OF BILL: An act to amend the tax law, in relation to qualified transportation fringe benefits
PURPOSE: To restore the New York State commuter pretax deduction benefit.
SUMMARY OF PROVISIONS: Section 1. Amends subsection (c) of section 612 of the tax law by adding a new paragraph 41 to make permanent the New York State pretax deduction benefit for commuting expenses for employees.
Section 2. Effective date.
JUSTIFICATION: Federal law permits employers to allow their employees to set aside a portion of their pre-tax wages to pay for transit, vanpool fares, and parking. In 2009, Congress approved an increase in the maximum transit benefit ($230/month), but required re-approval of the increase on an annual basis. An extension was approved in 2010, but Congress did not reauthorize another extension by the December 31, 2011 deadline. The result was that commuters' mass transit tax benefits were cut from $230 to $125 a month.
New York State mirrors this benefit, thus with Congress' failure to re-authorize the transit benefit in 2011, commuters saw both their state and federal benefits cut almost in half in 2012. Congress did finally approve an extension of the transit benefit at the eleventh hour in 2012 but, once again, it expired at the end of 2013. To date, Congress has not authorized a new extension of the transit benefit, and it does not appear likely that they will do so.
Washington's lack of action not only raised costs for commuters, it gave them new incentives to avoid mass transit all together. Commuters who drive in a carpool are allowed a similar pre-tax benefit to help offset parking costs under federal law. Unlike the pre-tax transit benefit, that law is permanent and indexed to inflation. This means that commuters who drive to work had their parking benefit increase to $240 a month in 2012 while mass transit riders' benefits were cut by nearly half. This disparity provided an incentive for commuters to drive to work and not use mass transit, increasing congestion and auto emissions.
This legislation is needed to protect commuters from losing their New York State monthly pre-tax transit benefit and to create parity on the state level between state pre-tax parking and transit benefits in the event that Congress again fails to act.
LEGISLATIVE HISTORY: 2013: Passed the Senate (S.770-B) 2012: Passed the Senate (S.2728C/A.6175B) 2011: Passed the Senate (S.2728B/A.6175A)
FISCAL IMPLICATIONS: Prior to December 31, 2011 this income was not taxed by the State, therefore there is no cost to the State.
EFFECTIVE DATE: This act shall take effect immediately.
STATE OF NEW YORK ________________________________________________________________________ 6397 IN SENATE January 21, 2014 ___________Introduced by Sen. CARLUCCI -- read twice and ordered printed, and when printed to be committed to the Committee on Investigations and Govern- ment Operations AN ACT to amend the tax law, in relation to qualified transportation fringe benefits THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Subsection (c) of section 612 of the tax law is amended by adding a new paragraph 41 to read as follows: (41) FOR TAXABLE YEARS BEGINNING AFTER DECEMBER THIRTY-FIRST, TWO THOUSAND THIRTEEN THE AMOUNT OF QUALIFIED TRANSPORTATION FRINGE BENEFITS INCLUDED IN FEDERAL ADJUSTED GROSS INCOME, TO THE EXTENT THAT SUCH QUAL- IFIED TRANSPORTATION FRINGE BENEFITS WOULD HAVE BEEN EXCLUDED FROM GROSS INCOME PURSUANT TO PARAGRAPH FIVE OF SUBSECTION (A) OF SECTION ONE HUNDRED THIRTY-TWO OF THE INTERNAL REVENUE CODE HAD THE FLUSH SENTENCE OF PARAGRAPH TWO OF SUBSECTION (F) OF SECTION ONE HUNDRED THIRTY-TWO OF THE INTERNAL REVENUE CODE THAT WAS IN EFFECT ON DECEMBER THIRTY-FIRST, TWO THOUSAND ELEVEN CONTINUED IN EFFECT AFTER DECEMBER THIRTY-FIRST, TWO THOUSAND ELEVEN; PROVIDED, HOWEVER, THAT IF SUBPARAGRAPH (A) OF PARA- GRAPH TWO OF SUBSECTION (F) OF SECTION ONE HUNDRED THIRTY-TWO OF THE INTERNAL REVENUE CODE IS AMENDED SO THAT FOR ANY MONTH THE DOLLAR AMOUNT IN EFFECT UNDER SUCH SUBPARAGRAPH (A) IS GREATER THAN THE DOLLAR AMOUNT IN EFFECT UNDER SUBPARAGRAPH (B) OF PARAGRAPH TWO OF SUBSECTION (F) OF SECTION ONE HUNDRED THIRTY-TWO OF THE INTERNAL REVENUE CODE FOR THE SAME MONTH, THE FLUSH SENTENCE OF PARAGRAPH TWO THAT WAS IN EFFECT ON DECEM- BER THIRTY-FIRST, TWO THOUSAND ELEVEN SHALL BE DEEMED TO PROVIDE THAT THE DOLLAR AMOUNT IN EFFECT FOR SUBPARAGRAPH (B) SHALL BE APPLIED AS IF THE DOLLAR AMOUNT THEREIN WERE THE SAME AS THE DOLLAR AMOUNT IN EFFECT FOR SUCH MONTH UNDER SUBPARAGRAPH (A). NOTWITHSTANDING THE FOREGOING, IF, PURSUANT TO THIS PARAGRAPH, THE AMOUNT THAT WOULD BE IN EFFECT FOR ANY MONTH UNDER SUBPARAGRAPH (A) OR (B) OF PARAGRAPH TWO OF SUBSECTION (F) OF SECTION ONE HUNDRED THIRTY-TWO OF THE INTERNAL REVENUE CODE IS LESS THAN ONE HUNDRED SEVENTY-FIVE DOLLARS, SUBPARAGRAPHS (A) AND (B) SHALL BE APPLIED AS IF THE DOLLAR AMOUNT IN EFFECT FOR SUCH MONTH UNDER SUCH SUBPARAGRAPHS WAS ONE HUNDRED SEVENTY-FIVE DOLLARS. S 2. This act shall take effect immediately.EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD01333-08-4