What are the contribution limits for commuter benefits?
In 2019, the IRS mandated limit for pre-tax contributions to commuter benefits accounts will be increasing:
- To $265 per month in transit expenses ($260 in 2018).
- To $265 per month for parking expenses ($260 in 2018).
Keep in mind, the pre-tax contribution limit applies to the combined total of both employer and worker contributions. Contributions over $265 a month for transit or $265 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.
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 $265 for transportation and/or $265 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.
Sally contributes $300 for parking and $300 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 $265 for transit and/or $265 for parking for March, and transactions that exceed the IRS pre-tax limits would use any post-tax funds remaining on the card.
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