CalorieCents

Today on my commute home, I saw an advertisement on the walls of the subway for the Chase Commuter Card.  Initially, I thought only subway costs applied but apparently it also includes any charges for NYC yellow taxis.  Essentially for every $150 you charge, you will receive $10 back.  There’s only about a month left to take advantage of this deal.

At a cursory glance, this may seem like a good deal but if we look deeper, it’s not so great.  Most New Yorkers that would anticipate a $150 in commuter expenses are most likely enrolled in their company’s pre-tax commuter benefit.  Even if your marginal tax rate is 10%, you would save $15 on your taxes without using Chase’s promotion.  Marginal tax rate is the rate of tax for any change (addition or deduction) in income usually referred to as your tax bracket.  Of course, tax savings is not an immediate benefit.

For me, a monthly pass before March was $76.  It would have taken two months for me to get the benefit.  But then my marginal tax rate is 25% so it really makes no sense to participate.

But had I known that it would have applied to NYC yellow cabs, I may have tried it.  I really doubt I could have taken $150 worth of taxi rides in 3 months though.

Moral of the story, when making choices that may impact your taxes, you have to know your marginal tax rate.