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 advisor to meet your particular circumstances.
| Category | Transit | Commuter Highway Vehicle (e.g., vanpool) | Qualified Parking | Qualified Bicycle Commuting Reimbursement |
| Incentive Levels | Up to $315/month* in 2024 for transit expenses | Up to $315/month* for commute trip in a vehicle with a seating capacity of at least six adults (excluding the driver), with at least 80 percent of the vehicle’s mileage for a year is reasonably expected to be for commuting and on trips during which the number of employees transported for commuting is at least one-half of the seating capacity of the vehicle (excluding the driver) | Up to $315/month** in 2024 for parking at or near an employer’s worksite, or at a facility from which employee commutes via transit, vanpool, or carpool | Qualified Bicycle Commuting Benefit remains ineligible as a tax free benefit. |
| Employer | Employers may give their employees up to $315/month for transit vouchers, commuter highway vehicle fares and/or commuter parking fees.
Change in 2019: Private sector employers are no longer able to deduct the tax-free qualified transportation fringe benefit payments to employees as a business expense. Only if an employer treats the qualified transportation fringe benefits as taxable W-2 wages to the employee, the employer can deduct the expenses of providing those benefits. Employers may allow employees to use up to $315 per month in pre-tax income to pay for transit vouchers, commuter highway vehicle fares and/or parking fees. |
Qualified Bicycle Commuting Benefit remains ineligible as a tax free benefit. | ||
| Employee | Most employees may receive up to $315/month for purchase of transit vouchers, commuter highway vehicle fares and/or parking fees from his or her employer. This subsidy value will not appear on their W-2 form as income.
Employee pays for commute benefit with the pre-tax income up to the $315/month statutory limit and receives more after-tax spendable income. Employee may combine the pre-tax benefit with employer subsidies up to $315/month for each to pay for transit vouchers, commuter highway vehicle fares and/or parking fees. |
Qualified Bicycle Commuting Benefit remains ineligible as a tax free benefit. | ||
* tax free transit and vanpool benefit limit was increased to $270 per month beginning on January 1, 2020. The limit remained unchanged for 2021. It increased to $280 per month in 2022. Tax free transit and vanpool benefit limit was increased to $300 per month for 2023. Tax free transit and vanpool benefit limit was increased to $315 per month for 2024.
** tax free parking benefit limit was increased to $270 per month beginning on January 1, 2020. The limit remains unchanged for 2021. It increased to $280 per month in 2022. Tax free parking benefit limit was increased to $300 per month beginning on January 1, 2023. Tax free parking benefit limit was increased to $315 per month beginning on January 1, 2024.
Table provided courtesy of the Best Workplaces for Commuters (www.bestworkplaces.org) – a program of the National Center for Transit Research at the University of South Florida. https://www.bestworkplaces.org/resource-center/faq-on-qualified-transportation-fringe-benefits.
