Monthly transit limit
$340
Monthly parking limit
$340
Annual transit maximum
$4,080
What the full election saves
Assuming you commute on transit every month and elect the full $4,080 for the year, for a single New York City resident:
| Salary | Income tax saved | FICA saved | Total saved | Real cost of transit |
|---|---|---|---|---|
| $75,000 | $1,276 | $312 | $1,588 | $2,492 |
| $100,000 | $1,296 | $312 | $1,609 | $2,471 |
| $150,000 | $1,378 | $312 | $1,690 | $2,390 |
| $200,000 | $1,378 | $312 | $1,690 | $2,390 |
| $250,000 | $1,743 | $312 | $2,055 | $2,025 |
FICA saving is calculated at 7.65% of the exclusion, which is the combined Social Security and Medicare employee rate, and assumes wages below the Social Security wage base. The income tax saving uses the same engine as the calculator.
Why this one beats a 401(k) per dollar
A traditional 401(k) contribution reduces income tax but not Social Security or Medicare, because deferred wages are still FICA wages. A qualified transportation fringe elected through a compensation reduction agreement is treated differently: the amount is excluded from income tax and from employment taxes, which is why the same dollar put through a commuter benefit saves more than the same dollar put into a 401(k).
The catch is that a commuter benefit is only useful for money you were going to spend on getting to work. It funds the commute rather than building an asset, so it sits alongside retirement saving instead of replacing it. The 401(k) guide covers the other half.
Model the rest of your paycheck
Add your commuter election and any retirement contribution together in the NYC paycheck calculator pre-tax field to see the combined effect, or check the NYC Deferred Comp guide and the commuter tax guides if you cross a state line.
Commuter benefit questions
How much can I put aside tax-free for commuting in 2026?+−
For 2026 the monthly exclusion is $340 for commuter highway vehicle transportation and transit passes, and $340 for qualified parking. The two limits are separate, so a driver who parks and also takes transit can use both.
Is a commuter benefit better than a 401(k) contribution?+−
They do different jobs, so the honest answer is to use both. A commuter benefit is better on a per-dollar basis because it is exempt from Social Security and Medicare as well as income tax, while a traditional 401(k) contribution still faces FICA. A 401(k) is the better long-term savings vehicle. The commuter benefit only applies to money you were going to spend on commuting anyway.
Does the commuter benefit reduce New York City tax?+−
Yes, if your employer offers it as a pre-tax payroll deduction. It reduces New York taxable income, which is the same figure the New York City resident tax is calculated on, so federal, New York State and New York City income tax all fall, along with FICA.
Does it work with OMNY and the subway?+−
Qualified transit passes and fare media cover the subway, bus and commuter rail, and payroll commuter benefit providers issue cards that work with the MTA's fare system. What counts is that the benefit is used for commuting on public transit or a commuter highway vehicle, not for personal travel.
What if I do not use the whole monthly limit?+−
You only save what you actually elect and spend. Electing the full monthly amount and then not spending it wastes the benefit, and some providers only carry funds forward for a limited period. Set the election close to your real monthly commuting cost.
Official sources
- IRS: 401(k) limit increases to $24,500 for 2026 (IR-2025-111)
- IRS: 2026 HSA inflation adjusted amounts (Rev. Proc. 2025-19)
- IRS: Publication 15-B (2026), Employer's Tax Guide to Fringe Benefits
The 2026 health FSA salary reduction limit is $3,400, also published in Publication 15-B.