A very welcomed change for many!! The U.S. House of Representatives passed the “Protecting Americans from Tax Hikes” (PATH) Act. This Act was passed On Dec.17th 2015. On December 18th, this measure was approved by The Senate. This Act has been rolled into the Consolidated Appropriations Act and the omnibus bill was signed into law that same day by our President.
This law uniformly aligns the previously skewed parking and transit Pre-Tax deductions limits. Signed on the 18th of December, 2015 by President Barrack Obama this change will be retroactive effective January 1st, 2015 and hold true moving forward.
Effective immediately the 2015 Transit Pre-Tax deductions limits will match those of the 2015 Parking Limits of $250/month. Moving forward into 2016 both limits will increase to $255/month.
At this time, employers have the choice to retroactively update their plans in accordance with the new law. However, the IRS has not mandated reclassification for 2015.
Maximum Monthly Tax Exclusions
$130/month (retroactively raised to $250)
IMPORTANT FOR CLIENTS OFFERING PRE and POST TAX TRANSIT ACCOUNTS IN 2015:Reclassification of 2015 funds has not been mandated by the IRS at this time. Employers electing to reclassify 2015 contributions will need to review their payrolls for each month in 2015, and update any W2s already sent to their participating employees. The reclassifications need to be done for each month that the employee contributed between $130.01 to $250.00. This reclassification needs to be done for each month, and not a total aggregate of the year.