Public transit tax benefit increased

Public transportation users will be able to withhold more of their paychecks from being taxed for their trips to work in 2013, according to the IRS.

The IRS has said that the amount of money that commuters can apply to set aside will increase to $245 this year. The tax benefit had been restored by the recently passed bill to avert the so-called "fiscal cliff" after being allowed to expire in 2011.

Under the new legislation, the set-aside amount for transit passengers will be retroactively set to $240 for 2012. The revenue agency said the amount will be adjusted for inflation to $245 in the current year.

Prior to the revival of the commuter tax benefit, which had long been sought by public transit advocates, passengers were only allowed to set aside $125 per paycheck for their trips to work.

Transit advocates complained because a similar benefit for workers who drive to work and pay to park was left at $240. 

The full list of IRS inflations can be read here.

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