Transit Subsidy Maximum Raised

The recently enacted economic stimulus bill raised the tax-free limit on subsidies that employers, including federal agencies, may provide to their employees for taking mass transit or van pools in their commuting. The provision raises the limit from $120 to $230 a month, effective immediately through the end of calendar year 2010—although such increases, once enacted, tend to become permanent. Policies on transit subsidies vary widely among agencies and even among locations within agencies, with some providing employees with passes covering commuting costs up to the maximum, others allowing employees to purchase them on their own with pretax payroll dollars, and others not providing any benefit. The programs typically are subject to the availability of budget dollars and in some cases are governed by bargaining agreements.