On December 18, 2016, President Obama signed the Protecting Americans from Tax Hikes (PATH) Act. Included in the bill is a provision that raises pre-tax contribution limits for commuter benefits to $255 per month, effective January 1, 2016. The new cap applies to both transit and parking benefits.
The provision brings parity to previously unequal mass transit and parking limits, which were capped at $130 and $255 per month, respectively. Additionally, the new rates have been made retroactive to 2015. The IRS is expected to release guidance on how employers should administer the retroactive increase in the coming weeks.
The new contribution limits come at the heels of New York City’s recent transit ordinance, which requires companies with 20 or more full-time employees to offer commuter benefits effective January 1, 2016. For more information on the new contribution limits, see IRS Publication 15-B under Transportation (Commuting) Benefits.
Andy Przystanski is Content Marketing Manager at Namely, the all-in-one HR, payroll, and benefits platform built for today's employees. Connect with Andy and the Namely team on Twitter, Facebook, and LinkedIn.
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