Key takeaways
- Lets employees pay for qualified transit and workplace parking with pre-tax dollars.
- For 2026, the limit is $340 per month for transit and $340 per month for parking — tracked separately.
- Elections can generally be changed monthly, unlike an FSA.
What it is
Pre-tax transit and parking benefits under IRC § 132(f). The account is a structure; the investments it holds are separate and carry their own risks.
How it works
- Elect a monthly pre-tax amount for transit, parking, or both.
- Pay with the commuter card or submit for reimbursement.
- Adjust the election as your commute changes.
Eligibility
Offered through an employer under a qualified transportation fringe benefit program.
Contributions and funding
Pre-tax salary reduction and/or employer contribution, capped at $340 per month for transit and $340 per month for parking in 2026.
What it can hold
Cash balances restricted to qualified transit and parking expenses.
Taxes and reporting
Excluded from gross income up to the monthly limits. Amounts above the limit are taxable wages.
Withdrawals and distributions
Used to pay qualified transit and parking costs. Balances generally do not refund in cash.
Risks and limitations
- Balances usually cannot be cashed out, and may be forfeited at termination
- Bicycle commuting reimbursement is not currently excludable
- Transit and parking limits do not combine
Frequently asked questions
Can I change my election monthly?
Generally yes — an advantage over FSAs.
Can I combine the two limits?
No. Transit and parking are separate monthly caps.
What happens to the balance if I leave?
It is typically forfeited. Spend it down before you go.
Educational only. This page is general information, not individualized investment, legal, or tax advice. Rules depend on your account type, transaction, tax year, and circumstances — consult a qualified professional.