The recently passed tax bill repeals the deduction for transportation expenses. The bill eliminates an employer’s business deduction for qualified mass transit and parking benefits. The only exception being if it's necessary to ensure the safety of an employee. However, employers can continue to sponsor employer-sponsored salary-deduction programs that allow employees to pay for mass transit and parking benefits on a tax-free basis.

The bill does, however, eliminate the tax exclusion on costs relating to biking to work through 2025. In 2026, those exclusions will return.

Next Steps

Employers who allow their employees to contribute to a pre-tax transit program that allows them to pay for their necessary transit expenses on a pre-tax basis can continue to do so. Employers who may subsidize the cost of transit benefits or otherwise are used to claiming a business deduction due to qualified transit expenses should be aware that they'll no longer be able to receive a tax break on those expenses. Individuals should also be aware that there's no tax deduction for any transportation expenses relating to biking to work through 2025.

Information contained herein is not intended to constitute tax or legal advice and should not be used for purposes of evading or avoiding otherwise applicable regulatory responsibilities as issued by the federal or state government(s) and/or taxes owed under the Internal Revenue Code. You are encouraged to seek advice from your legal or tax advisor based on your circumstances