The Internal Revenue Code allows employers to offer transportation benefits to employees on a before-tax basis through a qualified transportation fringe benefit plan. A qualified transportation fringe benefit plan may be provided for
- Transportation in a commuter highway vehicle between the employee’s residence and place of employment (not a single occupancy vehicle);
- Transit passes;
- Qualified parking;
- Qualified bicycle commuting reimbursement (not eligible for pre-tax treatment).
In 2020, an employee may set aside $270 per month ($3240/year) for qualified transportation fringe benefits and $270 per month ($3240/year) for parking benefits.
The State of New Jersey now requires employers who employ 20 or more workers to offer a pre-tax qualified transportation fringe benefit plan to all non-collectively bargained employees. The benefit must allow an employee to set aside wages on a pre-tax basis and use those amounts to purchase eligible transportation services. Eligible transportation services for New Jersey includes transit passes and commuter highway vehicle travel. New Jersey does not mandate the offer of parking benefits.
An employee for the New Jersey law is anyone employed by the employer and subject to NJ State Unemployment Compensation law. A New Jersey employee may set aside up to $270 per month ($3240/year) for qualified transportation benefits.
A New Jersey employer who does not offer a qualified transportation fringe benefit plan will be subject to a penalty of not less than $100 and not more than $250 for a first violation. The employer will have 90 days to offer an appropriate plan before the penalty is imposed. After 90 days, each additional 30 day period of failing to offer a plan will be another violation subject to a $250 penalty.