Internal Revenue Code Section 132 excludes from an employee’s gross income the value of certain fringe benefits provided by employers, such as qualified transportation subsidies. These Commuter Tax Benefits include mass transit passes, transportation in a commuter highway vehicle between an employee’s home and work (i.e., vanpools), bicycling and parking.
The monthly aggregate cap for vanpooling and any transit tokens, vouchers and fare cards is $130. The maximum monthly fringe benefit exclusion amount for qualified parking at or near a place of employment or in a park-and-ride lot is $250. Commuters can receive both the transit and parking subsidies, up to $380 per month. The exact tax savings depend on whether employee-paid through pre-tax salary deductions, employer-paid or a combination of both.
Employees who bike to work also can be reimbursed up to $20 per month. Unlike other transportation fringe benefits, bike commuters cannot use pretax dollars to pay for bicycle expenses. However, an employee cannot receive the bicycle commuter reimbursement for any month in which he or she receives an incentive for vanpooling, a transit pass or qualified parking benefits.