Each year, the IRS releases annual inflation adjustments for tax provisions, including the Qualified Transportation Fringe Benefit (QTFB). Last week, the IRS announced a $10 monthly increase to this important benefit bringing it up to $280/month. The benefit is one of the most effective TDM strategies in use by employers to help shift individuals away from single occupancy vehicles to public transit and vanpools. Commonly referred to as commuter benefits and/or transit benefits, the QTFB allows both employers and employees to receive tax benefits through the pre-tax purchasing of public transit fare media including vanpool fares. Employers can also choose to provide employees with a direct subsidy up to the monthly limit, perhaps eliminating the cost of commuting altogether.
Transportation costs represent the second-largest household expense for American families. “While the ongoing pandemic has prompted many Americans to continue to work remotely,” said Becky Seefeldt, VP of Strategy at Benefit Resource, “there are millions of hardworking people that don't have that luxury and rely on commuter benefits to make their commute a little more affordable. The increase in the monthly transit and parking limits ensures that they keep a little more in their pocket.”
The increase comes at a time where more workers are starting to return to the workplace as offices start to reopen. “We’re excited to learn about the newly increased monthly QFTB limit of $280/month,” said Hal Pasetsky, VP of Sales at Edenred Benefits. “As we see more of our clients transition back to the way life was before the pandemic, this newly increased limit will be a step in the right direction in providing reliable, safe, sustainable, and affordable commuting options. The new limits will help employees commute to work safely while saving money and reducing carbon footprint.”
After more than a year of so many seeing the benefits of working from home, employers are starting to look into offering more choice for how, when, and were people can work. “More than ever, we are seeing employers embrace the principle that no two commutes and no two commuters are the same,” said Sohier Hall, CEO of Luum by HealthEquity. “They are putting commuter benefit policies in place to support the future workplace—with more commute options and flexible subsidies to support and retain employees as they return to offices. The shift from monthly permits to daily parking is now foundational, and we are experiencing a giant shift toward wage-based commute subsidies in support of equity initiatives.”
ACT encourages all employers to explore the opportunity of providing the QTFB to their employees and continues to advocate for expansion of the benefit to cover additional modes. Stay up to date at www.actweb.org/fringe-benefit