WASHINGTON -- Mass transit commuters will lose part of their federal tax deduction for commuting costs starting Jan. 1 if they claim more than $130 each month.
The federal tax deduction for transit costs -- currently a maximum of $240 a month -- will drop to $130 because it's among 55 tax credits and deductions congressional leaders failed to renew before heading home for Christmas recess.
Other expiring tax provisions include: the deduction for state and local sales taxes; the tax credit for research and experimentation; the exclusion from taxes of charitable donations made from IRAs; and the $2 million expensing deduction for equipment purchases by businesses.
Sen. Charles Schumer, D-N.Y., unsuccessfully attempted last week to get unanimous Senate approval to renew the mass transit deduction as a stand-alone item.
But Sen. Orrin Hatch of Utah, the ranking Republican on the Senate Finance Committee with jurisdiction over tax policy, objected. "If we really want to enact this extension into law rather than sending out talking points, we have to engage in regular order when we get back,'' Hatch said, explaining that all of the expiring tax provisions should be considered as a package by the committee.
Hatch said the measures that are renewed can be made retroactive to Jan. 1.
Schumer said the tax break for commuting costs is more difficult than the others to make retroactive.
"I think it's not unfair to do it ahead of the other tax breaks because of the unique way it functions and it's harder, although not impossible, to enact retroactively,'' Schumer said, pointing out that it's paid on a month-to-month basis by employers.
Most of the other expiring tax provisions won't be claimed until individuals and businesses file their 2014 tax return in early 2015.
Some employers provide a regular pre-tax payroll deduction for employees who use their own money for commuting. Other employers -- including the federal government -- provide a mass transit benefit to help workers with their train, bus or van pool costs that are not treated as income because of the tax break.
That's also the case with employer-provided assistance with parking. The deduction for commuter parking will rise to automatically $250 a month in January, according to Schumer.
The transit deduction is helpful to commuters in highly urbanized areas such as the Greater New York-New Jersey-Connecticut region who already pay high transit fares.
Schumer estimated 700,00 New Yorkers claim it.
New Rochelle commuter Andrew Joseph estimated Tuesday that a reduction in the benefit would cost him and his wife $700 for the year. As transit costs rise, he said, driving with his wife to the city begins to become a more attractive option.
Transit activist Jim Cameron said he was "disappointed but not surprised'' Congress failed to act "given their track record on more important issues this year.''
"They should encourage as many people to take the train as possible," Joseph, 32, said at the New Rochelle train station.
Cameron uses Metro-North Railroad to commute to Manhattan several days a week from his home in Darien, Conn.
"It's layering on another level of aggravation,'' he said, noting that Metro-North riders in Connecticut also face a fare increase in January on top of the railroad's recent problems with derailments, including a fatal accident in the Bronx that left four people dead.