On Dec. 19, 2014, President Barack Obama signed the Tax Increase Prevention Act of 2014 (TIPA). One provision of TIPA establishes parity for the qualified transportation fringe benefits under IRC Section 132(f). This means that the limit on the exclusion for qualified transportation has now increased: from $130 to $250. This provision is retroactive to Jan. 1, 2014. The IRS has not yet issued related guidance for employers on how to address the retroactive adjustments. Since it is significantly easier, however, for employers to correct employee tax withholding during the year affected, some employers may choose to make adjustments prior to receiving IRS guidance.  

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Congress Passes Retroactive Increase to 2014 Qualified Transit Benefits

Dec 23, 2014

On Dec. 19, 2014, President Barack Obama signed the Tax Increase Prevention Act of 2014 (TIPA). One provision of TIPA establishes parity for the qualified transportation fringe benefits under IRC Section 132(f). This means that the limit on the exclusion for qualified transportation has now increased: from $130 to $250. This provision is retroactive to Jan. 1, 2014. The IRS has not yet issued related guidance for employers on how to address the retroactive adjustments. Since it is significantly easier, however, for employers to correct employee tax withholding during the year affected, some employers may choose to make adjustments prior to receiving IRS guidance.

Qualified transportation fringe exclusion limits are recapped below:

 

Transportation Benefit

Monthly Exclusion for 2014

Monthly Exclusion
for 2015

Pre-TIPA

After TIPA

Increase

Parking

$250

$250

$0

$250

Transit passes and van pools

$130

$250

$120

$130