Pre-Tax Transportation Benefits

On March 1, 2019, Gov. Murphy signed S1567 into law, requiring employers with more than twenty employees to offer pre-tax transportation fringe benefits to their employees who are not otherwise covered by a collective bargaining agreement.

Under the bill, an employee may set aside a certain portion of pre-taxed wages to be made available for specified transportation services and this will also reduce the employee’s federal taxable income. This pre-tax fringe transportation benefit includes services such as transit passes, commuter highway vehicle travel, and costs of parking at park-and-ride lots. This bill does not apply to employees of the federal government who are eligible for a transit benefit equal to or greater than the pre-tax transportation fringe benefit required by the state.

Please note that this law does not require employers to offer a qualified parking or bicycle benefit, but employers are permitted to do so.

The Commissioner of Labor and Workforce Development will enforce this new measure and is authorized to issue citations to employers that do not offer this pre-tax transportation fringe benefit. Employers that do not comply will be liable for a civil penalty of not less than $100 and not more than $250 for the first violation.

The NJ DOL intends to adopt rules and regulations to address the administration of and enforcement of this pre-tax benefit. The Act takes effect immediately, but shall remain inoperative for 365 days following the date of enactment (March 1, 2020) or upon the effective date of rules and regulations adopted.

S1567 »

Governor’s Statement »