In 2011, your employer could provide you with up to $250 per month in transit passes as a tax-free fringe benefit. In 2012, this benefit dropped to $125 per month.

In certain cases, the exclusion also applies to the expenses relating to a vehicle provided by the employer to be used for going and from work.

These exclusions apply to social security payroll taxes along with income taxes. Therefore, not only is the cost of the passes (up to the maximum exclusion) tax-free to you, your employer will save on payroll taxes.

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