Permanent Parity Between Mass Transit and Parking Benefits Is No Longer Just a Holiday Wish

December 31, 2015

Protecting Americans from Tax Hikes Act of 2015 Signed Into Law

On December 18, 2015 President Obama signed into law the “Protecting Americans from Tax Hikes Act of 2015” (PATH Act). Among many other tax code changes, the PATH Act includes an extension of the parity for the parking and mass transit benefit exclusion. Parity expired on January 1, 2015, causing the mass transit pretax savings exclusion amounts to be held at $130, while parking exclusions remained at $250. Going forward, any cost-of-living adjustments to the mass transit and parking benefit exclusions will be on par with the other.

Year Parking Benefit Exclusion Amount Transit Benefit Exclusion Amount 
2014$250 $130 
2015$250 $130 
2016$255 $255 

Employers wishing to take advantage of a commuter benefit plan that allows employees to set aside pretax dollars for use on qualified commuter expenses should set up an IRC § 132(f) commuter benefit plan. One key difference between this plan and the similar health Flexible Spending Accounts (FSA) is that the commuter benefit plan does not have a use-it-or lose-it penalty. But just like a health FSA, a plan document is required.

Download this PDF for all information that must be included in your IRC § 132(f) commuter plan document and contact an advisor today.