The $1.8 trillion year-end government funding and tax deal nearly doubles the amount of money public transit riders can set aside from their paychecks for a tax break on their commutes each month.
The 2,009-page measure unveiled late Tuesday includes a provision increasing the federal government's transit benefit, which was cut from $245 to $130 last year, back up to $255. That would make it equal to the amount that U.S. drivers have been allowed to put aside for pre-tax parking rates.
Many federal agencies pay directly for their employees transit expenses up to the amount of tax benefit limit.
Transportation supporters have been pushing for years to make the transit and parking benefits equal, arguing that the disparity discourages U.S. residents from considering public transportation options that would help ease congestion in major cities.
"Commuters who use public transportation and especially those with the longer commutes by rail, bus, or van pools have seen their annual commuting cost increase by up to $1,380 a year based on a bias in the tax code that eliminated the parity between public transportation and parking benefits for auto users," the American Public Transportation Association (APTA) said in a statement after the transit benefit was allowed to fall to $130 in 2014.
"We believe it is sound policy to maintain both the public transit and parking benefits at equal levels," the transit group continued then. "Restoring parity between transit tax benefits and parking tax benefits will eliminate the federal tax incentive to drive over taking public transportation."
The amount of their monthly incomes that transit riders are allowed to set aside before taxes for their work commutes was reduced from $245 to $130 at the beginning of 2014, over the objection of public transit advocates who argued that a similar tax break for drivers who park in garages was left unchanged.
The transit tax break was originally increased to $245 in the 2009 economic stimulus package. The benefit was reduced when the stimulus ended in 2011, but it was later restored in a 2012 bill pushing back sequestration until early 2013.
The extension was only for one year, however, so the benefit returned to $130 on Jan. 1, 2014. A one-month extension was approved by Congress in December of 2014, but the increase was not made retroactive, to the chagrin of transit advocates.
Transit supporters have fought since then for a permanent extension of the increased commuter tax break, but they were only able to win passage of a month-long extension last year until Tuesday's spending bill was unveiled.