The IRS has increased the amount employers and employees can set aside in qualified, tax-free transportation fringe benefit plans to $1,320 for 2007, Commuter Services of South Central Pennsylvania reported this week.

“Participating in the transportation fringe benefit plan helps employers to get an edge in recruiting and retaining workers. We often hear from employers in this region that this is their greatest challenge,” said Rich Farr, vice chair of the Susquehanna Regional Transportation Partnership and executive director of the York County Transportation Authority.

Similar in tax treatment to health savings accounts, the pre-tax payroll deductions up to $110 per month can be used by commuters to pay for vanpools and transit, or the employer can pay for the benefit. Commuters save money by reducing their federal taxable income and their commuting costs. Employers save by reducing payroll taxes, such as Social Security and Medicare.

Transit agencies partnering with Commuter Services include: Adams County Transit Authority; County of Lebanon Transit Authority (COLT); Red Rose Transit Authority (Lancaster); York County Transportation Authority (rabbittransit); and Capital Area Transit (CAT, Cumberland-Dauphin-Harrisburg).

CAT, rabbittransit, Red Rose Transit, and Colt all accept TransitChek and QuickPay, which are ways that employers can provide the qualified fringe benefit program. TransitCheks and QuickPay are used to buy passes, tokens or tickets.

The new $110 monthly maximum benefit is more than enough to cover current costs of monthly transit passes for these regional transit agencies.

Employers can contact Commuter Services regarding the options for taking advantage of the federal transportation tax benefit, provided by the IRS under Code Sec. 132(f)(2).

Visit the Communter Services of South Central PA website. Commuter Services, which serves seven counties that have more than 800,000 commuters, promotes transit use and vanpooling as two of several alternatives to driving alone to work.

1/5/2007