Some employees will be able to contribute more to their commuter benefit accounts next year.
The IRS is increasing the monthly pretax commuter benefit limits for both parking and transit to $340 in 2026, up from $325 in 2025, the agency announced last week. That equates to an annual limit of $4,080 for each benefit, totaling $8,160 in pretax commuter benefits for the year.
For 2026, an employee may receive up to $340 per month in reimbursements for qualified transportation expenses, such as commuter highway vehicle and transit passes. An employee may also receive up to $340 per month in reimbursements for qualified parking expenses in 2026, which could include monthly fees for parking garages or lots near the workplace.
The changes, taking effect on Jan. 1, apply to combined participant and employer contributions for eligible parking and transit expenses.
Commuter benefits are a pretax workplace program that allows employees to use a portion of their salary, before taxes are deducted, to pay for eligible commuting expenses. Eligible mass transit costs include fares for buses, subways, trains, ferries, and vanpools.
The IRS sets annual limits that are adjusted periodically, but employers aren't required to adopt the above plan limit adjustments within their plans.
Some employers may also contribute to the accounts. Not all employers offer commuter benefits. Twelve percent of employers offer a transit subsidy, while 10% of employers offer a parking subsidy (either onsite or offsite), according to the 2025 SHRM Employee Benefits Survey.
The boost will likely help employees as a growing number of employers bring workers into the office, making commuting more common. Many employees are frustrated with the time and costs associated with commuting, with a FinanceBuzz report finding that the average U.S. worker spends nearly $6,700 a year and roughly 30 minutes per workday commuting to and from the office. Industry experts say that commuter accounts can help ease the sting.
The IRS will announce the business standard mileage rate for 2026 in December.