New Jersey Employers Must Offer Employees Pre-Tax Commuter Benefits
Governor Phil Murphy recently signed a bill into law requiring New Jersey employers with at least 20 employees to offer a pre-tax transportation fringe benefit to employees (who are not currently in a collective bargaining agreement) beginning March 1, 2020.
The Federal Government allows employees to set aside $265 per month of pre-tax wages, which can be used for your mass transit commuting costs and parking while reducing your federal taxable income. That means you could save up to $900/year by not paying federal income tax on that salary. If you need to pay for parking to make your transit connection, the parking fees can be funded with pre-tax dollars up to an additional $265 per month.
To take advantage of these tax savings, your employer needs to opt-in to either the NJ TRANSIT Bulk Sales program or one of the programs offered by a third-party provider, like TransitChek by WageWorks. In addition to these programs, payroll service companies like ADP, offer a transit pre-tax benefit option. A common name for the benefit is “commuter tax benefit.”
Commuter tax benefits can be structured as an employee-funded tax-free payroll deduction, as an employer-funded benefit, or employer and employee can share the costs. The benefit can be delivered in the form of transit provider-specific passes or universally accepted vouchers and debit cards.
To help you through the process and provide the information, please contact:
NJ TRANSIT Bulk Sales Program