Maryland Expands Commuter Benefit Law

The Maryland General Assembly on April 1 overwhelmingly approved legislation expanding the most generous transit tax credit in the nation. The Commuter Benefits Act of 2000 (SB244/HB310) adds to the existing 50% tax credit that became effective this past January by:

• Allowing 501 (c)(3) and (4) nonprofit employers to claim the credit against the withholding tax;
• Establishing employer-paid guaranteed ride home programs as a qualifying expense and;
• Permitting employers to use the credit toward parking cash out or “pay-me-not-to-drive” programs. This incentive will give the employer the ability to offer their employee taxable cash income in return for an employer-paid parking space.

The bill, which is expected to be signed by Governor Parris Glendening, will take effect on January 1, 2001. When combined with the tax relief offered in federal Commuter Choice legislation, a transportation fringe benefit package could cost a Maryland employer less than $20 per employee per month. “When you do the math, the cost of providing this fringe benefit is a lot less than employee turnover costs due to lack of affordable transit access,” said Scot Spencer, a transportation specialist with Environmental Defense. “While the commuter benefit can help all employees, it is an especially tangible benefit to workers at the lower end of the wage scale.”

Maryland has taken significant steps to make administration of the benefit as effortless as possible. Employers notify the state of their intent to offer the benefit. Employers can then contact their local transit authority or transportation management agency to coordinate the purchase of transit passes or visit www.mtamaryland.com for information and details.

“The expansion of the current law will have significant impacts on reducing traffic congestion, improving air quality and increasing transit ridership,” said Spencer. Maryland’s Governor Glendening has established a goal of doubling transit ridership over the next twenty years.

Maryland Senator Ida Ruben and Delegate Paul Carlson, who also sponsored last year’s bill, sponsored the bill. It has the endorsement of Environmental Defense, the Chesapeake Bay Foundation, 1000 Friends of Maryland, the Maryland Chamber of Commerce, the Greater Washington Board of Trade, the Greater Baltimore Committee, the Maryland Association of Nonprofit Organizations, businesses including Port Discovery and the Mills Corporation and the Glendening Administration.