Tax Code Information
What are Transportation Fringe Benefits?
The U.S. Internal Revenue Service Code Section 132(a) outlines specific fringe benefits that employers may provide to their employees. These benefits can be deducted from an employee's gross income (prior to taxation), thus helping both the employer and employee save on taxes as neither pays federal income or payroll taxes on them. One such benefit is the Qualified Transportation Fringe Benefit (Section 132(a)(5); Section 132(f)). The Federal tax code allows employers to provide tax-free transit, vanpool, and/or parking benefits to their employees in one of three ways:
- Employer covers the full cost of the qualified transportation fringe benefit - subsidy / incentive program.
- Employer allows employees to reserve income on a pre-tax basis to cover the costs of a qualified transportation fringe benefit - employee paid pre-tax.
- The employer and employee share cost of the transportation fringe benefit - combination subsidy/incentive & employee paid pre-tax.
The 2013 monthly non-taxable maximums for qualified transportation fringe benefits are $240 for commuter transportation and $240 for commuter parking.
The tax information contained on this website does not represent any professional description of the tax laws affecting transportation fringe benefits, and such information is presented without any representation or warranty, express or implied, as to its accuracy or completeness. Accordingly, users of the website are cautioned to obtain competent professional advice from their own tax advisors regarding such laws.
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