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Qualified Transportation Fringe Benefit Summary Table

Qualified Transportation Fringe Benefits Summary Table


Qualified transportation fringe benefits (Section 132(f) of the Internal Revenue Code) or “Commuter Tax Benefits” are like money in the bank. Employers save on payroll related taxes. Employees save on federal income taxes.

According to Internal Revenue Service’s  Revenue Procedure 2016-55, the monthly limitation under § 132(f)(2)(A) regarding the aggregate qualified transportation fringe benefit exclusion amount for transportation in a commuter highway vehicle and any transit pass is $255 for taxable years beginning in 2017.  The monthly limitation under § 132(f)(2)(B) regarding the fringe benefit exclusion amount for qualified parking is $255. Bicycle commuting reimbursement limitations remain at $20 per month.

More information on qualified transportation fringe benefits can be found at Best Workplaces for Commuters’ Knowledge Base.

Download our free Commuter Benefits eBook

Whether you are considering setting up a qualified commuter transportation fringe benefit program or you just want to brush up on the basics, this free ebook can serve as your essential guide to setting up and carrying out a successful commuter benefit program.

From determining what commuter benefits are eligible for providing tax free to employees to customizing the program for your circumstances, this ebook will guide you through the options available to effectively provide your employees with a commuter benefits program. Employers can leverage employer-provided benefits to yield happier employees, support more sustainable employee commute behavior, and generate tax savings for employees and the employer.

This comprehensive guide includes:

  1. Type of Qualified Transportation Fringe Benefits
  2. Tax Free Limits
  3. Tax Savings for Employers and Employees
  4. Tax Benefits of Employee Pre-tax Deductions
  5. Frequently Asked Questions
  6. Qualified Transportation Fringe Benefit Rules Regarding Electronic Payment Media (New)
  7. Profiles of Organizations Providing Subsidized Commuter Benefits
  8. Eight Steps to Starting a Commuter Benefit Program as a Pre-Tax Payroll Deduction
  9. Employer Decision-Making Process (New)
  10. Effects of Commuter Benefits on Travel Behavior
  11. Additional Resources
  12. Appendix – A Brief History of Qualified Transportation Fringe Benefits

Best Workplaces for CommutersEmployers that subsidize at least $30 per month for transit or vanpool fares may meet the National Standard of Excellence and qualify for designation under NCTR’s Best Workplaces for Commuters.

The following summary was prepared to concisely but generally explain qualified transportation fringe benefits.  However, there are exceptions (e.g., partners, 2% owners in S-corps) so you should check with your tax adviser to meet your particular circumstances.  For definitions of terms, click on the URLs in the table, including the headers.

2017

(2017 rates remain the same as 2016)

Transit Commuter Highway Vehicle (e.g, vanpool) Qualified Parking Qualified bicycle commuting reimbursement
Incentive Levels Up to $255/month*** for transit expenses Up to $255/month*** for vanpool expenses Up to $255/month**** for parking at or near an employer’s worksite, or at a facility from which employee commutes via transit, vanpool, or carpool Up to $20 per qualified bicycle commuting month. This exclusion for qualified bicycle commuting reimbursement includes any employer reimbursement during the 15-month period beginning with the first day of the calendar year for reasonable expenses incurred by the employee during the calendar year.
Employer Tax Benefit Employers give their employees up to $255/month*** to commute via transit; gets a tax deduction and saves over providing same value in gross income or Employers allow employees to use pre-tax income to pay for transit and employers save on payroll tax (at least 7.65% savings) or A combination of both up to statutory limits Employers give their employees up to $255/month*** to commute via vanpool; gets a tax deduction and saves over providing same value in gross income or Employers allow employees to use pre-tax income to pay for vanpooling and employers save on payroll tax (at least 7.65% savings) or A combination of both up to statutory limits Employers give their employees up to $255/month**** for qualified parking; gets a tax deduction and saves over providing same value in gross income or Employers allow employees to use pre-tax income to pay for qualified parking and employers save on payroll tax (at least 7.65% savings) or a combination of both up to statutory limits Employers reimburse their employees up to $20/month for qualified bicycle commuting; gets a tax deduction and saves over providing same value in gross income According to the IRS, “Generally, you can exclude qualified transportation fringe benefits from an employee’s wages even if you provide them in place of pay. However, qualified bicycle commuting reimbursements do not qualify for this exclusion.”
Employee Tax Benefit Employee receives up to $255/month*** tax free for transit or vanpool (this value will not appear on their W-2 form) or Employee pays for commute benefit with the pre-tax income and saves on income tax or A combination of both Employee receives up to $255/month*** tax free (not on their W-2 form) or Employee pays for commute benefit with the pre-tax income and saves on income tax or A combination of both Employee receives up to $255/month**** tax free (not on their W-2 form) for qualified parking or Employee pays for commute benefit with the pre-tax income and saves on income tax or A combination of both Employee reimbursed up to $20/month for reasonable expenses related to commuting by bicycle

 

*** tax free transit and vanpool benefit limit increased from $130 per month in 2014 to $250 per month beginning January 1, 2015.  It was raised to $255 per month for 2016 and remains at this level for 2017.

**** tax free parking benefit limit increases from $250 per month in 2015 to $255 per month beginning January 1, 2016. The parking benefit remains at this level for 2017.

Qualified bicycle commuting month.
For any employee, a qualified bicycle commuting month is any month the employee: Regularly uses the bicycle for a substantial portion of the travel between the employee’s residence and place of employment and does not receive: Transportation in a commuter highway vehicle, Any transit pass, or Qualified parking benefits

.Reasonable expenses include: The purchase of a bicycle and Bicycle improvements,repair, and storage. These are considered reasonable expenses as long as the bicycle is regularly used for travel between the employee’s residence and place of employment.

Additional Resources

Contact Information

Best Workplaces for Commuters
c/o Center for Urban Transportation Research
University of South Florida
4202 E. Fowler Ave., CUT100
Tampa, FL 33620
Julie Bond
Project Manager
bond@bestworkplaces.org
813.974.9799