Internal Revenue Service (IRS) Tax Benefits for Commuting:

Twenty-five years ago, a simple yet ingenious idea took root: By allowing workers to defray public transportation costs through their employers’ benefits packages, we could reduce traffic congestion and improve air quality. – See more at: http://www.commuterbenefitsworkforus.com/history.html#sthash.yvvekjc1.dpuf

 

Twenty-five years ago, a simple yet ingenious idea took root: By allowing workers to defray public transportation costs through their employers’ benefits packages, we could reduce traffic congestion and improve air quality. In 1998, Congress amended the tax code to allow employees to take advantage of commuter benefit using their own pre-tax dollars.

Today, commuter benefits have joined health, retirement and disability at the top of the list of voluntary benefits offered to employees by their employers.  Federal law allows employers three ways to reduce the cost of commuting via public transportation (bus, vanpool, train or ferry) for employees.  Companies can offer employees:

  1. A tax-free employer-paid benefit
  2. A pre-tax employee-paid payroll deduction, or
  3. A combination of the above

Twenty-five years ago, a simple yet ingenious idea took root: By allowing workers to defray public transportation costs through their employers’ benefits packages, we could reduce traffic congestion and improve air quality.

In 1998, Congress amended the tax code to allow employees to take advantage of the benefit using pre-tax dollars.

In 2009, Congress raised to $230, the monthly tax-free cap commuters could spend on the transit benefit. This created parity between the transit and parking portions of the commuter benefit, further promoting the use of eco-friendly modes of transportation. In 2012, however, the cap was reduced to $125. In 2013, as a result of strong Congressional and public support, the cap had equal standing with parking benefit at $245.

Today, commuter benefits have joined health, retirement and disability at the top of the list of voluntary benefits offered by companies. Effective January 1, the monthly transit benefit cap was cut nearly in half to $130 while the monthly parking benefit cap increased to $250.

If you support parity between the parking and transit benefits – take action now.

– See more at: http://www.commuterbenefitsworkforus.com/history.html#sthash.yvvekjc1.dpuf

Twenty-five years ago, a simple yet ingenious idea took root: By allowing workers to defray public transportation costs through their employers’ benefits packages, we could reduce traffic congestion and improve air quality.

In 1998, Congress amended the tax code to allow employees to take advantage of the benefit using pre-tax dollars.

In 2009, Congress raised to $230, the monthly tax-free cap commuters could spend on the transit benefit. This created parity between the transit and parking portions of the commuter benefit, further promoting the use of eco-friendly modes of transportation. In 2012, however, the cap was reduced to $125. In 2013, as a result of strong Congressional and public support, the cap had equal standing with parking benefit at $245.

Today, commuter benefits have joined health, retirement and disability at the top of the list of voluntary benefits offered by companies. Effective January 1, the monthly transit benefit cap was cut nearly in half to $130 while the monthly parking benefit cap increased to $250.

If you support parity between the parking and transit benefits – take action now.

– See more at: http://www.commuterbenefitsworkforus.com/history.html#sthash.yvvekjc1.dpuf

Beginning January 1, 2014

The maximum allowed pretax mass-transit benefit for employees fell from $245 per month in 2013 to $130 in 2014.

The tax-free and pre-tax limits for employer provided commuter (fringe) benefits for the 2014 tax year follow:

  • $130 per employee per month for vanpool, bus, rail, ferry (all public transportation)
  • $250 per employee per month for qualified parking
  • $380 per employee per month for a combination of public transportation and parking

If an employer pays an amount over the monthly limit to an employee, it should be treated as taxable income.

An employee may pay part of all of the cost of public transportation with pre-tax income via a payroll deduction; the employee can set aside up to $130 per month of pretax income during 2014 tax year. The employee saves federal withholding and FICA payroll taxes on the amount of deducted.  The employer saves paying FICA on the amount deducted. Pre-tax payroll deductions are referenced in the Internal Revenue Code, Section 132(f) as amended by TEA-21, Title IX, Section 910.

 

Best Workplaces for Commuters

Looking to implement commuter benefits as part of your organization? Visit the Best Workplaces for Commuters 2013 Commuter Benefits guide to get more information on types of qualified commuter benefits, tax savings for employers and employees, tax benefits of employee pre-tax deductions, and more. You can also visit their website to learn more about this program.

For more information, please visit Commuter Benefits Work for Us.

 

 

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