Skip to Content
Streetsblog Los Angeles home
Streetsblog Los Angeles home
Log In
Streetsblog USA

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

Photo: TransitCenter

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 a 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 Los Angeles

L.A. City Approves Measure HLA Ordinance

Both City Council and Mayor approved the city HLA ordinance, which goes into effect on August 18.

July 17, 2025

Supes Move to Restore Measure J

Supes look to fix an oopsie that lead to accidentally repealing criminal justice reforms.

July 16, 2025

City Breaks Ground on Mid-City Greenways Bike/Walk Improvements

The 4+mile Mid-City Greenways project is focused on three streets: Rosewood Avenue, Formosa Avenue, and Orange Drive

July 15, 2025
See all posts