NEWARK, N.J. — N.J. Transit customers can now nearly double their savings on annual transportation costs by participating in workplace programs that allow pre-tax wages to be set aside for transit.
The recently enacted federal stimulus bill immediately increases the amount of pre-tax wages that can be set aside for transit purchases to $230 per month, up from the former $120 limit.
“This provides immediate and significant benefits to our customers,” said N.J. Transit Board Member Ken Pringle. “I applaud President Obama and Congress on this provision of the stimulus bill which encourages more commuters to take advantage of transit and puts money back in the pockets of hard-working families.”
For N.J. Transit customers whose monthly transit costs reach or exceed $230, their federal and FICA taxes can be cut by about $1,000 per year by participating in an employer-sponsored pre-tax transit purchase plan. Under the previous withholding cap, participants could save slightly more than $500 per year.
“This is great news because it effectively reduces annual transit costs by hundreds of dollars for many of our customers,” said N.J. Transit Executive Director Richard Sarles. “In addition, it encourages more employers to participate in the program, giving New Jersey commuters another incentive to switch to transit.”
The higher withholding limit for monthly transit costs now matches the amount that can be set aside on a pre-tax basis for parking expenses, giving public transportation users the same benefits received by those who drive to work and pay for parking.
N.J. Transit customers are encouraged to ask their employer about pre-tax transit benefits. Employers benefit from reduced payroll taxes.
Leading third-party administrators of pre-tax commuter benefit services include TransitCenter, Benefit Resource, WageWorks and Accor Services USA.
“The increase in the transit tax benefit to $230 per month is not only good news for financially stretched families but is getting the attention of many companies,” said Larry Filler, president and CEO of TransitCenter Inc. “We’ve seen a doubling of interest in our TransitChek Program because it’s one of the few ways left for employers to help their employees with rising costs with significant savings for their companies. This is truly a win-win for everyone.”
“Not only did over 50% of our eTRAC participants increase their elections since the limit was raised to $230, we saw a spike of an additional 17% increase in participation levels,” said Tony DiBarnaba, president of Benefit Resource Inc. “At $230 per month, employees who did not participate prior to the increase can now save as much as $1,000 per year. That’s a real stimulus.”
“The increase is great news for both commuters and their employers,” said WageWorks CEO Joe Jackson. “The new limit will go a long way toward helping those in the tri-state area who pay upward of several hundreds of dollars each month commuting. We also hope it encourages more employers to promote their programs and gain the hidden tax savings that can be gained by transferring more of their employees’ compensation to a pre-tax benefit.”
