NYC Transit Law 2016NYC Transit Benefit Mandate for 2016

NYC become the 3rd  U.S. City to require  Employer Transit Benefits following SF and Washington, DC.  Beginning in 2016, the ordinance will require employers (not including government employers) with 20 or more full-time employees in New York City to provide full-time employees a pre-tax qualified transportation benefit program (excluding parking subsidies). It would mean that an estimated 450,000 more New York City-based employees will have access to the commuter tax break. That’s in addition to the 700,000 who already get the break.

“The ordinance will require private employers with 20 or more full-time employees in New York City to provide a pretax qualified transportation benefit program for their full-time employees.” For purposes of the ordinance, a full-time employee is one who works 30 or more hours per week.

Penalties:

While the new ordinance goes into effect January 1, 2016, it provides  a six-month grace period, so penalties will not begin until July 1, 2016. Penalties for a first violation will range from $100 to $250. If an employer corrects the violation within 90 days of being notified, then penalties will be waived. If correction (the steps for which have not yet been described) does not occur, penalties for the first violation will apply and an additional penalty will apply, equal to $250 for each 30-day period in which the employer continues to fail to offer the required benefits.

Tax Savings:  NYC Transit Chek and Metrocard

The way the pretax commuter tax break works is employees exclude their transit commuting costs from their taxable wages up to the $130 monthly limit (there’s a separate $250 monthly limit for parking). If you’re in the 40% combined federal and state bracket and you put away $130 a month pretax salary to use for transit, you save $624 a year. This also saves the employer money because the employer doesn’t pay payroll taxes of 7.65% on every dollar set aside by employees pre-tax.

$130 transit maximum    NEW $255 transit maximum for 2016

  • EE Savings @ 40% tax bracket = $1200/year
  • ER Savings (FICA) = $230/year

$255 parking maximum

  • EE Savings @ 40% tax bracket = $1,200/year
  • ER Savings (FICA) = $230/year

 

Next Step:

If you want your employer to add commuter benefits—so you’re eligible for the tax break–petition your HR department, and specifically ask for the pretax commuter benefits program (why wait until 2016?). To learn more about the NYC Transit Mandate, please visit the official website of the City of New York.  To start  a Transit benefit within 24 hours contact us today  (855) 667-4621 or info@medicalsolutionscorp.com.