Bill Would Save Commuters Money, Give Tax Credit to Employers, Cut Traffic and Pollution

February 28, 1999

The Environmental Defense Fund (EDF) today joined with local chambers of commerce, civic groups, Maryland Senator Ida Ruben, and Delegate Paul Carlson to urge passage of the Maryland Commuter Choice Tax Credit Bill that would provide a state income tax credit for employers who help pay employee transit costs. The bill would give employers a tax credit of up to $30 per employee per month. The Maryland Senate Budget and Tax Committee today held a hearing on the legislation.

The Maryland Chamber of Commerce has endorsed the bill, along with the Environmental Defense Fund, Greater Washington Board of Trade, Washington Metropolitan Transit Authority, Maryland Department of Transportation, Chesapeake Bay Foundation, Coalition for Smarter Growth, Center for Clean Air Policy, Citizens Planning and Housing Association, 1000 Friends of Maryland, Action Committee for Transit, Annapolis Regional Transportation Management Association, BWI Business Partnership, Inc. and others.

The new bill would encourage wider use of a Federal law passed last year that lets employers deduct pre-tax money from workers’ paychecks to help pay commuting costs. “Many are still unaware of the tax cut included in the 1998 Federal transportation law that can save employees and employers hundreds of dollars per worker each year,” said Michael Replogle, EDF’s Federal transportation director.

“The Maryland Commuter Choice Bill would help the state take full advantage of the Federal tax code changes, keeping more of the earnings of Maryland workers in-state, instead of sending them to Washington,” said Replogle. “The Maryland Commuter Choice bill would cut traffic and pollution, boost the use of transit, and add to employee benefits, at a low cost to the employer. While this bill helps all commuters, it especially benefits those with low wages that are more dependent on transit and ridesharing and least able to afford their commute. The commuter choice tax credit would be a smart transportation policy to cut traffic growth, avoid unneeded road construction, and support Smart Growth.”

Under the bill, an employer would get income tax credit for 50 percent of employer-paid transit benefits, up to $30 a month for each employee. For example, an employer might give an employee a free $60 transit pass every month, while claiming a $30 tax credit. Or an employer could pay for $30 of a $60 monthly transit pass or ridesharing expense voucher and claim a $15-a-month tax credit, while the employee would pay their half of the cost using pre-tax earnings, cutting the after-tax cost for the employee to under $20.