New DC Employer Transportation Benefits Plan Requirement

July 21, 2015

Businesses based in the District of Columbia will soon be required to offer qualified transportation benefits to their employees. As of January 1, 2016, the new District of Columbia Employer Transit Benefit Ordinance takes effect for DC employers with 20 or more employees.

A qualified transportation plan allows employees to make pre-tax elections for mass transit and parking expenses incurred when commuting to and from their workplace. A qualified transportation plan also allows for employers to pay for these expenses, as well as commuter bicycling expenses, on a tax-free basis. Both employee pre-tax elections and employer payments are subject to IRS monthly limits.

The new Ordinance requires that DC employers provide at least one of the following options:

  1. An employee pre-tax election program for mass public transit or vanpool costs (bicycling expenses cannot be deducted on a pre-tax basis);
  2. An employer-paid program for mass public transit, vanpool, or bicycling costs; or
  3. Employer-provided transportation at no cost to the employee in a vanpool or bus provided by the employer.

Employers are not required to include parking expenses in the transportation plan.

If you are a DC employer with at least 20 employees working in DC and do not currently offer a qualified transportation benefits plan, please contact your Keller account team for assistance.