Does buying a Metropass make sense?

NOTE: This post has not been updated as of the January 1, 2012 fare increase. For more up-to-date information, please jump to Metropass economics: 2012 edition.

As a result of a conversation with a coworker recently, I decided I should do the math on the economics of the TTC Metropass. For those of us in Toronto that use transit as our primary means of getting around, the unlimited-use monthly Metropass is a no-brainer. But what about buying a Metropass just for commuting, versus tokens or cash fares?

If you just ride the rocket to and from work, you’ll make 40 trips in a month. Some months will have more or fewer work days, but we’ll start there. If you pay the $3 cash fare each time, you’ll spend $120 on transit in the month. A Metropass costs $121. Seems like paying cash is the less expensive option, right?

But wait!

Metropasses are eligible for the federal transit pass tax credit. That means you can reduce your federal taxable income by the full amount of the Metropass, or to put it another way, the federal government pays for 15% of the cost of your Metropass. That’s assuming that you have an income and you file an income tax return, of course, but if you’re reading this comparing the cost of commuting by cash or by pass, chances are you do.

The tax credit is effectively a 15% discount on the cost of a Metropass, or $18.15, making the cost to you of buying a pass $102.85, although the discount is on your tax return and not in your pocket. But they’re the same in the long run. That’s a fair discount over the $120 you’d pay in cash fares.

Put another way, if you can benefit from the tax credit, the Metropass pays for itself on your 35th trip in one calendar month.

If you’re really savvy, you can sign up for the Metropass Discount Plan. MDP passes are $111, and the TTC debits your bank account on the 1st and mails you a new pass a week or so earlier. No more waiting in huge lines at the subway station, or finding out they’ve sold out already! Of course, you have to make a 12-month commitment, or else pay the difference on the passes you’ve already received if you cancel. With the tax credit, an MDP pass costs $94.35, or less than the 32nd trip.

Happy travels!