Skip to Content
Streetsblog New York City home
Streetsblog New York City home
Log In
Commuting

America Spends $7.3 Billion a Year Paying Affluent People to Drive to Work

Every day, the streets of American cities are more clogged and polluted at rush hour because the federal government pays people to drive to work.

The culprit is the commuter tax benefit, a $7.3 billion annual subsidy that mainly offsets parking costs for people who drive to work. The people who benefit the most are high earners who drive into the U.S.'s biggest, most congested cities and can write off the maximum $255 per month in tax-free income.

The tax break for car commuters is not only regressive, it also generates traffic at exactly the worst time -- rush hour -- and in exactly the worst places -- the central areas of major cities, according to a new study from TransitCenter and the Frontier Group [PDF].

Transit center graph
A model developed by Andrea Hamre at Virginia Tech shows the massive effect of commuter subsidies on mode choice in major American cities. Graphic: TransitCenter
false

Placing a finger on the scale of people's commute decisions can have a profound influence on behavior. A model developed by Virginia Tech researcher Andrea Hamre estimates that in five cities -- Washington, DC, Baltimore, Philadelphia, Newark, NJ, and New York City -- a subsidy solely for parking at work would reduce transit's share of the commuting pie 25 percent, compared to scenario with no commuter subsidy.

The federal government does allow transit commuters up to $255 a month in pre-tax income to offset the cost of fares. But people can claim it only if their employer offers the benefit. The parking subsidy is much more widely used -- the government spends $7.3 billion a year on it, compared to $1.3 billion for transit.

Cities would be better off if both subsidies were eliminated. TransitCenter estimates that without the commuter tax benefit, 66,000 fewer people would drive to work in the 25 largest U.S. cities.

As long as the commuter benefit persists, local governments can at least help even the playing field. A number of cities, including New York, DC, and San Francisco, have ordinances requiring most employers to offer the transit benefit to their workers.

Stay in touch

Sign up for our free newsletter

More from Streetsblog New York City

Council Transportation Chair Asks DOT To Rip Up a Bike Lane

The same Queens pol who berates the DOT for failing to build enough bike lanes wants one torn out of her district.

March 24, 2025

Monday’s Headlines: Subway ‘Shithole’ (Yes, That’s What He Said) Edition

U.S. DOT Secretary Sean Duffy visited a sinkhole in New Jersey, but nonetheless cursed out our subway system. Plus other news.

March 24, 2025

Albany Running Out of Options to Close MTA Funding Gap: Watchdog

Tighten the belt and give up the frills, the Citizens Budget Commission warned.

March 21, 2025

Advocates Demand New Jersey Agencies Cough Up Congestion Pricing Data

NJT and the Port Authority need to cough up some actually useful post-congestion pricing travel data, advocates on both sides of the Hudson River said.

March 21, 2025

Friday’s Headlines: Fake Deadline Extended Edition

It's the first day of spring and, if you're U.S. DOT Secretary Sean Duffy, it was supposed to be the last day of congestion pricing. But it's not. Plus other news.

March 21, 2025
See all posts