Increase in Monthly Pre-Tax Transportation Benefits

The federal government has increased monthly pre-tax commuter benefits that employees may take to pay for transportation from $270 to $280 for 2022. Otherwise known as the  Qualified Transportation Fringe Benefit, employers must enable employees to take this benefit monthly. This program can increase health and wellness for your employees and make it easier and less expensive for them to take advantage of transportation alternatives.

The details:

• P14 of IRS Revenue Procedure 2021-45 raises the qualified transportation fringe benefit monthly limitation from $270 in 2021 to $280 in 2022.
• Rule .17 Qualified Transportation Fringe Benefit.
  • For taxable years beginning in 2022, the monthly limitation under § 132(f)(2)(A) regarding the aggregate fringe benefit exclusion amount for transportation in a commuter highway vehicle (vanpool) and any transit pass is $280.
  • The monthly limitation under § 132(f)(2)(B) regarding the fringe benefit exclusion amount for qualified parking is $280.

Please note for 2018 through 2025, the Tax Cuts and Jobs Act (TCJA) suspended the exclusion for qualified bicycle commuting reimbursements. Prior to TCJA, employers could reimburse employees up to $20 per month for eligible bicycle expenses. The budget reconciliation package still being considered by Congress would possibly restore and expand the bike benefit. If that package passes, the bike benefit will be back for 2022. Stay tuned!

More information and a summary table of 2021 rates is on the Best Workplaces for Commuters website.