**CURRENT UPDATE: As of January 11, 2013, the IRS increased the pre-tax limit for transit and parking benefits from $240 to $245 for tax years beginning in 2013. This was a cost-of-living increase.**
A notable benefit to employers and employees regarding the newly passed American Taxpayer Relief Act of 2012 (HR 8), is restoring the pre-tax benefit for employees commuting to work on public transit to $240 per month. Prior to the passage of this law, the pre-tax benefit was limited to $125 per month for public transit expenses and $240 for parking expenses.
This is welcomed news as employees face increased payroll tax liabilities with the Social Security tax level returning to 6.2% from 4.2%. Employers will now be able to share with their employees a new opportunity to reduce their payroll tax liability.
We recommend contacting your employee benefits consultant and/or commuter benefit administrator immediately to discuss the details on how to revise employee elections for the 2013 plan year.