Commuting Tax Benefits

Employer-subsidized commuting benefits can be excluded from state and federal tax returns.  

 

Benefits for carpooling, vanpooling and mass transit can be excluded from gross income, as long as they are provided in addition to regular compensation. Cash received for commuting benefits is also excludable, provided there is proof the money was used for an alternate means of commuting i.e., receipts or ticket stubs.

 

On state returns in New Jersey, the maximum deduction for vanpooling and transit benefits in 2008 is $1,410. If the benefits received exceed this amount, the excess is taxable and must be included in  the gross income. The taxable benefits are included in the "State Wages" figure on a W-2, while the nontaxable benefits are not. See Form NJ-1040 instruction booklet for additional information about commuter transportation benefits.

The economic stimulus package includes a provision that increases the amount of mass transit and vanpool benefits that can be excluded from an employee's gross income.  The maximum excludable amount for vanpooling, mass transit or parking is now $230/month. Any excess is taxable and must be included in the gross income.