What is a Parking and Transit Plan?
Section 132(f) of the Internal Revenue Code allows qualified transportation expenses up to certain limits to not be taxed. Expenses such as qualified parking, vanpooling and transit passes can be reimbursed from this account. Irrevocable elections are not required – meaning the employee is permitted to make, revise and halt their elections. This section of the tax code gives an employer a means to supplement and enhance their employee benefit offering, and at the same time reduce both the employer’s and employee’s tax liability. The employer and employee can exclude this reimbursement from wages for FICA purposes.
