You’ve probably read that enrolling in a transportation reimbursement account (TRA) is one of the easiest—and pain-free—ways to save money on your daily commute since it allows you to set aside pre-tax dollars to pay for train tickets, bus tickets, and parking. Now, with the passing of last week’s fiscal cliff bill, mass transit-riders can now save even more.
The American Taxpayer Relief Act of 2012 allows commuters to now withhold up to $240 a month tax-free from their paychecks, up from a paltry $125. (Those using an account to pay for parking expenses can still withhold $240 per month.) According to Wage Works, a transit account and flexible spending account provider, this could help you save more than $1,000 this year.
Contact your employer’s benefits department to find out how to increase your TRA withholding. Even though it’s not open enrollment time, many businesses will allow you make withholding adjustments on your account.