2024 Pay or Play Affordability Percentage

Unused Commuter Transit Benefit May be Used for Parking

The Internal Revenue Service (IRS) recently issued a letter stating that employees may apply unused commuter transit benefit amounts to parking benefits in certain circumstances. The letter was presented in response to a question from an employee who, due to COVID-19, opted to drive to work instead of using public transportation.

In summary, the IRS declared that an employee “is not precluded from rolling over unused transit benefit amounts through the use of another qualified transportation fringe,” such as qualified parking, if the other fringe:

  • Is offered by the employer’s plan; and
  • Does not exceed the maximum monthly amount for respective qualified transportation fringe benefit.

Additionally, the letter indicates the following limitations:

  • Amounts set aside under a compensation reduction agreement are not refundable other than by payment of another qualified transportation fringe under the employer’s plan; and
  • The employee must have made a valid compensation reduction election (and not have been terminated) to use compensation reduction amounts for commuting expenses in future months.


Under Internal Revenue Code Section 132(f), employers can offer a qualified tax-free transportation 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).

The monthly maximum excludable amount for qualified parking remains unchanged at $270 for 2021. The combined 2021 monthly limit for the other qualified benefits in a commuter highway vehicle and transit passes, is also unchanged at $270 for 2021.

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