Note to our readers: This is a friendly reminder that your employees can increase their saving with the new transportation and parking limits. Click on the link below to read the full email release that was sent 12/23/2015. Cadillac Tax Delayed and Permanent Changes Made to Transportation Accounts.
Beginning in 2016, the monthly maximum tax exclusion for qualified mass-transit passes or van pool rides will increase from $130 per month to $255 per month, the same as the already established $255 per month cap for qualified parking benefits. Organizations can subsidize their employees’ commuting or parking costs with pretax dollars up to the allowable monthly limit, which results in lower payroll taxes than if they paid the money in wages. Alternatively, employees can pay for mass-transit passes or parking by having pretax dollars deducted from their paychecks through an employer’s salary deferral program, up to the allowable monthly limit.
The measure also retroactively raises the 2015 mass-transit tax-exclusion limit from $130/month to $250/month, equal to the existing 2015 cap of $250/month for parking benefits. Unfortunately, for employees who fund their benefits with pretax dollars through a salary deferral program, retroactively contributing more than $130/month for 2015 could be administratively difficult.