New law increases commuter benefits in 2016
As you may know, the Consolidated Appropriations Act, 2016, was signed into law on December 18, 2015. Many changes were made under the Act, including restoration of transit parity.
Effective Jan. 1, 2016, the commuter tax benefit limit for transit riders increases to $255 a month. This gives transit and parking equal subsidies in the tax code. You may want to let your employees know about these changes. They can choose to increase pretax contributions to their transportation expenses. The law also retroactively raises the 2015 combined limit for public transportation and vanpooling benefits from $130 monthly to $250 monthly.
In 2016, the limit for parking benefits also increases to $255 per month. Qualified parking benefits did not change in 2015 and remain at the $250 maximum per month.
These changes are based on a cost of living adjustment by the Internal Revenue Service.
You may want to let your employees know about these changes. They can choose to increase pretax contributions to their transportation expenses.
Remember, unlike health flexible spending accounts, transit benefit enrollment is available any time during the year.