NJ Employers Now Must Offer Pre-Tax Transit Benefits

The NJ Transit Benefits Law, which took effect on March 1, 2020, requires New Jersey employers with 20 or more employees to provide their employees with the opportunity to use pre-tax dollars to pay for work-related transit expenses, consistent with IRS rules. For 2020, the maximum amount that employees may set aside is $270/month for transit expenses, plus an additional $270/month for parking expenses.

In order to provide this benefit, employers can opt-in to either the NJ Transit Bulk Sales program or one of the programs offered by a third-party benefits provider. Many payroll service companies also offer a pre-tax transit benefit option, commonly referred to as a “commuter tax benefit.”

Employers that fail to offer this benefit will be assessed a penalty of not less than $100 and no more than $250 for every 30-day period during which the benefit is not provided. However, an employer will have a 90-day “cure period” following the finding of a violation to offer the pre-tax transit benefit before the penalty is imposed.

If you have questions about the New Jersey Transit Benefits Law, or would like assistance with any other HR matter, please call our office at 631-794-7400 to speak with one of our HR Business Partners, or EMAIL US.