Tax break doubled to discourage solo drivers
- Blog Post by: Tim Harlow
- January 21, 2013 - 10:41 AM
Commuters may have missed the news that the fiscal cliff legislation signed by President Obama this month contains a provision that allows employers to offer up to $240 a month in tax-free benefits to employees who use public transportation or a vanpool to get to work.
That's an increase from $125 a month under old IRS rules.
Employers can get a tax deduction by providing the Commuter Choice benefit or can save on payroll taxes by allowing employees to use pre-tax dollars to buy transit passes or pay vanpool costs. Employees save on federal income taxes.
But benefits of vanpooling go far beyond lower taxes, says Charlie Stark of Northfield. He has been vanpooling for nearly 30 years, and he estimates savings of more than $500,000 by sharing rides. His riders have collectively pocketed almost as much, all while catching up on sleep, polishing off novels, knitting and even finishing college degrees, he said.
"It seemed like a waste of time and money for everybody to drive by themselves," said Stark, who was honored by Metro Transit during the 2012 Commuter Choice Awards with a Lifetime Achievement Award.
Stark was driving solo from Northfield to Rochester five days a week and found he often was behind the same vehicle on the trip home. One day he followed that driver into Northfield and asked him if he wanted to carpool. Stark never drove to work alone again.
He advertised his carpool at IBM in Rochester and found four more riders. When Stark switched jobs and began working in downtown St. Paul, he did the same thing. He soon had enough interest that he organized a vanpool, shuttling 10 people from Northfield to the Twin Cities. Each paid $120 per month to cover gas and parking.
"We saved 1 million miles over 10 years, and at 50 cents a mile that's $500,000 not spent on fuel and vehicle operational costs," Stark said. "And how much time did we save by not being behind the wheel?"
John Thomas joined Stark's vanpool in 2005 and studied on the one-hour trip each way. In five years he finished his bachelor's degree and earned two master's degrees.
"Without the vanpool, I could not have done that," said Thomas, who now runs his own technology consultant business. "It's definitely the way to go."
Minnesotans drive to work alone at a higher rate than the national average, with 78.2 percent of state workers commuting solo, according to 2010 data from the Bureau of Transportation Statistics.
In 2008, with the sour economy and skyrocketing gas prices, 9.4 percent of commuters used a vanpool, the bureau said. The Metro Vanpool program sponsored by the Met Council had 71 registered vanpools of five or more people that year, the highest total in the past 10 years. The number dipped to 60 in 2010, rose to 65 in 2011 and rose back to 71 at the end of 2012.
With the increased tax benefit, Metro Transit spokesman John Siqveland is hoping vanpooling will become an attractive option for commuters.
"Stark provides a great example of how much commuters can save by sharing the ride instead of driving alone," Siqveland said.
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