Transit tax benefits increase in 2013

January 22, 2013

Commuters who take advantage of federal transit benefits are going to gain even more than previously thought, according to the Internal Revenue Service.

Transit users can set aside a certain amount of pretax income for commuting. The cap was $230 a month in 2011, but it dropped to $125 per month last year.

The bill Congress approved earlier this month to avoid the so-called “fiscal cliff” included two key changes to these transit benefits. It increased the monthly cap while also noting that the benefits could be applied retroactively.

The Internal Revenue Service recently announced that the monthly limit for transit would be $245 in 2013, rather than the $240 cap initially expected. The $240 limit will be retroactively applied to 2012, replacing the $125 ceiling that was in place that year (before the bill was approved).

So what does the retroactive change mean for you, the commuter? On a basic level, it means that you get to keep a little more money this year and you get a little bit more back from last year.

For employers, this means extra work in applying these benefits to employee wages. The IRS also released a notice explaining how employers should go about making sure employees benefit from these changes.

Mark Berman is a reporter on the National staff. He anchors Post Nation, a destination for breaking news and developing stories from around the country.
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Mark Berman | January 22, 2013