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April 11, 2019

New Jersey Pre-Tax Transit Benefit Coming Soon

On March 1, 2019, Governor Murphy signed a transit benefits law requiring employers to offer pre-tax transit benefits. This law becomes applicable on the earlier of March 1, 2020 or the date the New Jersey Department of Labor and Workforce Development adopts regulations.

Employers subject to law

Both for-profit and not-for-profit employers that are subject to New Jersey’s unemployment compensation law and employ 20 or more employees shall offer a pre-tax transportation fringe benefit to its employees. Employer includes state and local governments.  Employers with 19 or fewer employees and the federal government are excluded from the requirements.

Eligible employee

Any employee who works for remuneration for an employer is eligible for the transit benefit.

Transit benefits

Employers must offer an IRC Section 132 qualified transportation pre-tax program. As a reminder, these types of programs are similar to, but cannot be a part of an IRC Section 125 cafeteria plan.

A qualified transportation program provides:

  • Commuter Highway Vehicle (van pooling) and Any Transit Pass (up to $265 per month, indexed for 2019)
  • Qualified Parking (up to $265 per month, indexed for 2019)

Enforcement

Any employer that fails to offer transit benefits to employees will be subject to a penalty of not less than $100 and not more than $250 for a first violation. The employer will have 90 days to offer the employees transit benefits before the penalty is imposed. If the employer fails to offer such benefits after 90 days, each additional 30 days in which the employer fails to make such offer will be considered a subsequent violation, subject to a penalty of $250.

 

The information contained in this article is provided as general guidance and may be affected by changes in law or regulation. This article is not intended to replace or substitute for accounting or other professional advice. Please consult a CBIZ professional. This information is provided as-is with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.

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