Federal subsidy can be broadly defined as any financial assistance provided to particular transportation modes, transportation activities, or specific groups of transportation infrastructure users. This definition includes both direct monetary transfers as well as indirect subsidies. In this report, net federal subsidies are estimated as the difference between federal outlays for passenger transportation and receipts collected from users of the passenger transportation system. Thus, the value of net federal subsidies can be either positive or negative. Negative numbers show user fee payments to the federal government in excess of allocated cost. Detailed data on federal subsidies such as service-specific or vehicle-type-specific estimates are calculated using allocation formulas that estimate the cost responsibilities and revenue contributions of specific services or types of vehicles. It should be noted that not all types of federal subsidies will be captured using this method. Some of the indirect subsidies, such as federal tax exemptions, favorable tax treatment, or favorable laws and regulations that can create money transfers through market mechanisms, are not covered. Tax credits for Amtrak under the Taxpayer Relief Act of 1997, which were specifically designed for that transportation company, have been included.
The estimates in this report include net federal subsidies to passenger transportation for highway, air, transit, and intercity railroad transportation. Subsidies to passenger transportation by state and local government are not included. The data for highway are further subdivided into net federal subsidies to autos, motorcycles, pickups and vans; school buses; transit buses; and intercity buses. Subsidies to air transportation are also presented separately for commercial air carriers and general aviation. All data are compiled in current and chained 2000 dollars. The more heavily traveled modes will tend to have larger subsidies. Thus, to show the amount of subsidy relative to the level of use of transportation infrastructure, we normalized the data by dividing the absolute net subsidy values by passenger-miles.
 Indirect subsidies include the provision of transportation infrastructure to users at less than its full cost, federal tax exemptions, tax credits, preferential tax treatments, and provision of favorable laws and regulations that create transfers through market mechanisms.
 The chained 2000 dollar values are computed by deflating the current net subsidy values by the GDP deflator for federal non-defense expenditures, which is obtained from the National Income and Product Account tables of the Bureau of Economic Analysis.