What does this mean? Commuters who are buying monthly SEPTA passes of Zone 2 or greater or NJ Transit passes of Zone 3 or greater now can have 100% of their pass cost covered by the RideECO benefit. Until now, the cap was $130/month, requiring commuters to use post-tax dollars to make up the difference of fares.
This increase in the cap allows employees who are taking the maximum allowed to realize an annual savings of nearly $1,000. In addition, employers can expect annual savings of more than $230 per employee, per year.
Can we expect this legislation to expire? No. The legislation allows for permanent parity between transit, vanpool and parking benefits at $255.
What about retroactivity? The legislation included a clause that allows for retroactive commuter benefits for 2015 at $250. If the employer withheld post-tax deductions above $130 or provided an employer-paid subsidy greater than $130, the employer will be able to retroactively apply the $250/month cap for 2015. The IRS previously provided this guidance regarding retroactive commuter benefits.
We encourage you to speak with a licensed accountant or tax attorney regarding specific questions regarding the tax implications of this new legislation.