Payne, Menendez, Booker Deliver Holiday Gift for NJ Transit Riders: Tax Breaks, Money Back in Their Pockets

Payne, Menendez, Booker Deliver Holiday Gift for NJ Transit Riders: Tax Breaks, Money Back in Their Pockets

MONTCLAIR, NJ – Congressman Donald M. Payne, Jr. (NJ-10) joined U.S. Senator Bob Menendez and U.S. Senator Cory Booker at New Jersey Transit’s (NJT) Walnut Station in Montclair to urge transit commuters to take advantage of new federal tax benefits to help pay the cost of rising bus and train fares.

The federal spending and tax package, approved by Congress and signed into law last week, included a provision co-authored by Sen. Menendez that increases the maximum monthly commuter tax benefit for transit riders, and brings it permanently in line with the benefit enjoyed by those who drive to work. Beginning Jan. 1, those who rely on public transportation can set aside up to $255 per month in pre-tax earnings to pay their commuting expenses, amounting to an estimated annual savings of over $1,000 for transit riders who recently were forced to absorb a 9% NJT fare hike.

“Mass transit is a lifeline for so many people in my district who depend on it every single day to go about their lives,” said Rep. Payne, Jr. “So expanding and making permanent the transit tax break is a huge victory for commuters in our state. They deserve, and can now rightfully benefit from, the same tax break as people who drive. By making transit and parking benefits equal, we will not only encourage more commuters to take public transportation, we will no longer penalize people for choosing mass transit over driving.”

“Transit parity is real, substantive tax relief for middle and working class Americans. It is real money back in the pockets of cash-strapped transit riders,” said Sen. Menendez, the ranking member of the Senate Banking mass transit subcommittee and a member of the Senate Finance Committee that handles federal tax policy. “Incentivizing mass transit is the right thing to do, especially in such a densely populated state like New Jersey. It gets people out of their cars and off our roads. It reduces traffic congestion and air pollution, and it improves the overall quality of life for residents.”

“As transit users are forced to bear the brunt of fare hikes, this transit tax credit could put more than $1000 back in commuters’ pockets annually while finally providing some much-needed parity with those who drive to work,” said Sen. Booker, the top-ranking Democrat on the Commerce, Science and Transportation Subcommittee on Surface Transportation, which has jurisdiction over passenger rail in the U.S. “While this bill is far from perfect, I am pleased to see it include provisions that save New Jersey commuters’ hard-earned dollars while increasing investments in our region’s crumbling infrastructure. Continued robust funding like this for the New Starts program bodes well for critical infrastructure projects like Gateway that will provide much-needed relief for commuters and help boost our economy.”

With the monthly maximum transit benefit increased to $255 in 2016, it will cover 100% of a $210 monthly rail pass between Montclair and New York Penn Station, and similarly will cover 100% of a $254 monthly pass from Metropark to Princeton.  Had parity not been restored, these percentages would have been 62% and 51% respectively.  It will also cover 100% of a $181 monthly bus pass between Glassboro and Philadelphia, compared to just 72% without parity.

Until now, commuters who drive to work have traditionally received disproportionately greater tax relief than their counterparts who take public transportation.  This year, motorists were able to set aside up to $250 monthly in pre-tax earnings to cover their commuting expenses, compared to just $130 a month for bus, train and ferry riders.

Annual Tax Savings for a Worker Making $50,000


Without Commuter Benefits

With Commuter Benefits





Commuting Costs



Taxable Income



Federal Taxes Paid (25% bracket)



Payroll tax



Take Home Pay







Sen. Menendez has co-sponsored the Commuter Benefits Equity Act in the last four Congresses to permanently correct the disparity between the transit and parking tax benefit, and successfully introduced it with Sen. Charles Schumer (D-N.Y.) as a provision of the final federal spending and tax package.

”We thank our tri-state federal delegation for pushing to create permanent parity to the commuter tax benefit for transit riders. Providing the same tax benefit to transit riders that drivers receive with a parking benefit is balanced and progressive fiscal policy. It also provides another monetary incentive to use buses, subways and rails. This makes sense for our environment and economy,” said Veronica Vanterpool, executive director Tri-State Transportation Campaign.

The federal lawmakers also touted several other provisions contained in the so-called omnibus legislation to improve New Jersey’s and the nation’s transportation infrastructure:

  • New Starts Transit Program – Provides $2.2 billion, a $57 million increase over current funding levels to fund the design and construction of new transit lines, or extensions of existing lines.  NJT could apply for this funding in the coming months to fund the planned Hudson-Bergen Light Rail West Side extension in Jersey City, and it’s a program that could be a significant source of funding for the Gateway Hudson River rail tunnel project once it receives design and environmental clearances.
  • Transportation Investment Generating Economic Recovery (TIGER) Grants – Provides $500 million for TIGER grants, which go to our nation's infrastructure projects that make communities more livable and sustainable.  The U.S. Dept. of Transportation (USDOT) this year awarded $16 million towards constructing the 105-year-old Portal Bridge replacement.
  • Airport Improvement Grants – Provides $3.35 billion for the Airport Improvement Grant program, which distributes grants to airports across the state, such as Newark, Teterboro Airport, and Atlantic City International Airport, for critically-needed infrastructure projects to enhance capacity and reduce congestion, as well as to improve safety and reduce aircraft noise and emissions. These airport projects also support thousands of contractor jobs in the state.
  • Amtrak – Provides $1.39 billion for Amtrak, which is chosen by 78 percent of passengers traveling between New York and Washington, D.C. over air travel.
  • FAST Act – Fully funds highway and transit programs at levels provided for in the recent transportation bill—including $600 million next year in guaranteed transit funding for New Jersey, and $1 billion in guaranteed highway funding.