How can I get tax-free commuter benefits? Is the money available for parking, or do I need to use it for the subway or bus?
If your employer offers commuter benefits, you can set aside up to $255 pretax each month for parking and $255 for mass transportation (such as the train, subway, light rail, bus or ferry) in 2016. If you pay for both parking and mass transit—say, if you drive to a park-and-ride lot and then take a train or subway to work—you can take both benefits, setting aside up to $510 in pretax money each month. Your employer will automatically deduct the money from your pay, and it won’t be subject to income, Social Security or Medicare taxes.
These benefits (also called Section 132 transportation benefits) are larger than they were at the start of 2015, when you could set aside up to $250 for parking each month but only $130 for mass transportation. A law signed in December 2015 permanently bumped up the mass-transit limits to match the parking limits, effective retroactively for 2015, and then both benefits were increased to $255 in 2016 to account for inflation.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The sign-up rules vary by employer. Most let you enroll in the program anytime during the year, but some let you sign up only during an open-enrollment period, such as every six months. Your employer may give you a variety of options for receiving the money. WageWorks, which administers benefit plans for employers, gives participants the option to use funds in their transportation account to buy passes directly from more than 650 transit providers around the country or to have the money loaded onto a smart card. It may also issue a debit card that people can use to purchase transit fare with the pretax money, says Dan Neuburger, president of commuter services for WageWorks.
The firm’s commuter savings calculator can help you estimate how much money you can save in taxes by participating in the program.
-
Dow Hits New Intraday High on Fed Day: Stock Market TodayNot even the most important stock in the world could keep the oldest equity index down on a significant day for markets.
-
Savings Goal CalculatorTools Want to know how much you need to save each month to reach your financial goals? Our calculator helps you build a realistic savings plan.
-
Standard Deduction 2025 Quiz: How Much Do You Really Know?Quiz Test your knowledge of IRS rules that impact how much money you keep in your wallet.
-
New Bill Would End Taxes on Social Security Benefits in 2026: What Retirees Should KnowTax Law Congress could look to high earners to help offset lost revenue and possibly shore up the Social Security program.
-
New $6,000 'Senior Bonus' Deduction: What It Means for Taxpayers Age 65-PlusTax Changes If you’re an older adult, a new bonus tax deduction could provide a valuable tax benefit. Here's how it works.
-
Claiming the Standard Deduction? Here Are 10 Tax Breaks For Middle-Class Families in 2025Tax Breaks Working middle-income Americans won’t need to itemize to claim these tax deductions and credits — if you qualify.
-
Over Age 65? New $6,000 'Senior Bonus' Deduction Is Available Even If You ItemizeTax Changes If you’re an older adult, a new bonus tax deduction could provide a valuable tax benefit. Here's how it works.
-
New Trump Tax Bill: Five Changes Homeowners Need to Know NowTax Changes Trump’s new tax legislation is reshaping how tax breaks for homeowners work.
-
How the 2025 Child Tax Credit Rules Impact Single ParentsTax Credits New changes to family tax credits, like the Child Tax Credit, will impact the eligibility of some households.
-
How Your 2025 Wedding Could Save You Money on TaxesTax Breaks There are some wedding expenses that are tax-deductible, and you don’t want to miss out on savings.
