What are the contribution limits for commuter benefits?

The IRS mandated limit for pre-tax contributions to commuter benefits accounts will be increasing:

• To $300  per month in transit expenses 
• To $300  per month for parking expenses 

Keep in mind, the pre-tax contribution limit applies to the combined total of both employer and worker contributions. Contributions over $300 a month for transit or $300 a month for parking are loaded onto the card as post-tax contributions.

• Post-tax deductions for contributions over the limits are listed on paychecks.
• Both post- and pre-tax funds can be used for a single transaction.

Example 1:

Bob contributes $200 for qualified parking and $100 for transit expenses a month. This is below the monthly pre-tax limit set by the IRS, and the funds are not included in his wages as taxable income.

• In February, Bob used only $100 of their parking funds and $50 of their transit funds.
• In March, Bob had parking and transit expenses of $500.

In this case, Bob can spend up to $300 for transportation and/or $300  for parking for March.

• Transactions made after these totals are spent would be declined.
• The remaining amount must be paid out-of-pocket, even though there were leftover funds from the previous month.

Example 2:

Sally contributes $320 for parking and $320 for transit expenses a month. This is above the monthly pre-tax limit set by the IRS, and the funds in excess of that amount are included in Sally's wages as taxable income.

• In February, Sally used only $100 of their funds for parking and transit.
• In March, Sally had parking and transit expenses of $500.

Sally would be allowed to spend up to $300  for transit and/or $300  for parking for March, and transactions that exceed the IRS pre-tax limits would use any post-tax funds remaining on the card.