Qualified Transit/Parking Accounts

Qualified Transit/Parking Accounts

The QTP is an employee benefits account regulated by IRS Section 132. The purpose of this pre-tax account is to reimburse employees for eligible transit and parking expenses, up to the IRS statutory limit.

 

Under general principles of taxation, all fringe benefits provided to an employee by his or her employer (including transportation plans) are taxable to the employee unless the Code provides a specific exclusion for the benefit. Since 1985, employers have been permitted to give the following transportation fringe benefits to employees on a tax-free basis:

 

  • qualified parking;

  • transit passes;

  • transportation in a commuter highway vehicle, if such transportation is in connection with travel between the employee’s residence and place of employment (also known as “vanpooling”).

For most transportation fringe benefits, the maximum amount that employees can exclude from income is subject to a statutory limit that is periodically adjusted for inflation. The current limits are as follows:

 

Transit/Vanpooling pre-tax monthly limit: $265

Qualified Parking pre-tax monthly limit: $265

 

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