2021 Transportation Benefit Limits Remain Unchanged

The Internal Revenue Service (IRS) has released Revenue Procedure 2020-45, which includes cost-of-living adjustments for employee qualified transportation fringe benefits for the 2021 taxable year. The combined 2021 monthly limit for transportation in a commuter highway vehicle and a transit pass remains unchanged at $270. For qualified parking, the monthly limit is also unchanged at $270 for 2021.

Under Internal Revenue Code Section 132(f), employers can offer a qualified tax-free transportation benefit program to their employees. Under the program, employees can choose to have money withheld from their taxable compensation to pay or reimburse work-related expenses for qualified parking, transit passes and transportation in certain commuter highway vehicles (e.g. qualifying van pools).

Before the beginning of each calendar year, the IRS announces the maximum monthly amount of qualified transportation benefits that employees may exclude from their income, subject to cost-of-living adjustments. Both employee pre-tax salary deferrals and employer-paid benefits, if any, count toward the maximum amount.

To avoid any benefit disputes, employers will want to communicate the monthly limits to their employees. For additional information, click here.


Questions? Contact the Creative Benefits team by calling 866-306-0200 or emailing us at solutions@creativebenefitsinc.com.