• 2/23/09 - Stimulus Law Includes a Temporary Increase in the Income-Tax Exclusion for Transportation Benefits

  The American Recovery and Reinvestment Act of 2009, signed by President Obama on February 17, 2009, includes a temporary increase in the income-tax exclusion for transportation benefits. This provision of the law is intended to help employees with their commuter expenses.

  Background
  Qualified transportation benefits, including transit passes, parking, vanpooling and bicycling expenses, can be excluded from income under Section 132 of the Internal Revenue Code. Transit, parking and vanpooling expenses are subject to a maximum exclusion, which is indexed annually. For tax years beginning on January 1 2009, the maximum exclusion for qualified parking expenses was $230 per month, and $120 per month for mass transit and vanpooling (combined).

  Transportation Benefits Affected
  The temporary income-tax exclusion bill affects transit passes and expenses associated with vanpooling in 2009 by increasing the $120 per month maximum exclusion for such items to equal the $230 per month exclusion for parking. In 2010, the dollar amounts for each benefit may increase, depending on any inflation adjustment. The increase in the exclusion does not affect the qualified bicycle commuting reimbursement.

  Effective and Termination Dates
  The temporary increase in the income-tax exclusion for transit passes and vanpooling will take effect starting March 1, 2009. It is scheduled to terminate for months beginning after December 31, 2010.

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