As part of the federal budget bill that was signed into law on December 18th, 2015, the maximum monthly tax exclusion for employer-provided mass transit benefits was increased.
As a result, the limit for transit benefits is now equal to the limit for employer-provided qualified parking benefits. The increase applies retroactively to months after 2014.
Employers that sponsor qualified transportation fringe benefit plans should update their plan design and work with their vendors to implement the maximum limits. In addition, those employers should be sure that they are complying with any local requirements (for example, New York City now requires employers to offer transit benefits to their employees).
Here is a look at the updated maximum monthly limits:
Note for Employers in Massachusetts
For employers in Massachusetts, please take note of this special announcement from the Commissioner of Revenue.
Here is a key paragraph from that announcement: “For taxable years beginning in 2016, the Massachusetts monthly exclusion amounts are $255 for employer-provided parking and $130 for combined transit pass and commuter highway vehicle transportation benefits, as further explained below. Under Massachusetts law, these numbers reflect an inflation adjustment but do not include the increase in the federal monthly exclusion amount for the combined transit pass and commuter highway vehicle transportation benefits that was signed into law on December 18, 2015.“
I hope that you find this compliance update helpful.
We encourage all clients to log-in to the CBGconnect portal to download our full Compliance Bulletin on this topic. If you have any questions, please contact our team at 781-759-1222.