Transportation plans offer valued benefits but pose compliance issues 

Employers have had the option to offer qualified transportation fringes on a tax-advantaged basis going back to 1992. Since 1998, employees have been able to pay for these benefits through pretax salary reductions under Internal Revenue Code (IRC) § 132(f). The tax exemption extends to commuting expenses for transit passes, qualified parking and van pools. For the 2009 through 2017 tax years, the tax exemption also applied to qualified bicycle commuting.

While these benefits, which have become quite popular, are not subject to cafeteria plan or ERISA rules, compliance difficulties exist. For starters, the federal monthly limits are adjusted every year. In addition, some state and local jurisdictions have imposed employer mandates, leveraging the tax advantages of commuter benefits; still other jurisdictions provide tax-related incentives.

This GRIST summarizes major issues concerning qualified transportation plans under federal, state and certain local laws. Download the 17-page print-friendly PDF to read the full GRIST.

• 2026 quick benefit facts (Nov. 14, 2025)
• One Big Beautiful Bill includes employer-friendly provisions (July 8, 2025)
• New Jersey to mandate employers offer pretax transit benefits (March 5, 2019)