Commuter benefits mandates by state and city: a 2026 guide
Federal law allows pretax commuter benefits but does not require them. Eleven U.S. jurisdictions do require them. Employer thresholds range from 10 employees (Berkeley and Richmond, CA) to 250 (Los Angeles SCAQMD worksites). The federal limit in 2026 is $340 per month for transit and $340 per month for qualified parking.
The mandate table
| Jurisdiction | Effective | Employer threshold | Covered employee | Key rule |
|---|---|---|---|---|
| New York City | 2016 | 20+ full-time employees in NYC | 30+ hrs/week | Pretax election up to federal limit |
| New Jersey (statewide) | 2020 | 20+ employees in NJ | All employees, with limited exemptions | Pretax election up to federal limit |
| Washington, D.C. | 2016 | 20+ employees in DC | All employees | Pretax election, employer-paid subsidy, or employer-provided transit |
| Philadelphia | Dec 31, 2022 | 50+ covered employees | 30+ hrs/week in Philadelphia, 12+ months | Pretax election or employer-paid direct benefit |
| Illinois (RTA region and Bloomington-Normal) | Jan 1, 2024 | 50+ covered employees within 1 mile of fixed-route transit (six-county RTA region + Bloomington-Normal) | 35+ hrs/week, after 120 days | Pretax transit election up to federal limit |
| Seattle | Jan 1, 2020 | 20+ employees worldwide | 10+ hrs/week in Seattle | Pretax election OR employer subsidy up to federal limit |
| San Francisco Bay Area (nine counties) | 2014 | 50+ full-time employees | 20+ hrs/week | One of: pretax election, employer subsidy, employer transit, or alternative commuter benefit |
| Berkeley, CA (TRACC) | 2017 | 10+ employees averaging 10+ hrs/week | All employees | One of: pretax, employer-paid transit/vanpool/bike, or employer shuttle |
| Richmond, CA (Municipal Code Ch. 9.62) | 2009 | 10+ employees averaging 10+ hrs/week | All employees | One of: pretax, employer-paid transit/vanpool, employer transportation, or a city-approved alternative |
| Los Angeles area (SCAQMD Rule 2202) | 1995 (amended) | 250+ employees at a worksite | All employees | Choose from emission-reduction strategy menu, including pretax |
| Hawaii (state-enabling) | 2018 | Set by county ordinance; the statute has no threshold, and no county ordinance is in force as of September 2026 | Per county | Pretax election up to federal limit, employer subsidy, or employer-provided transportation |
What the limits are in 2026
- $340 per month for transit and vanpool, under the federal commuter benefit rule (ยง132(f)) as adjusted by IRS Rev. Proc. 2025-32
- $340 per month for qualified parking (parking garages, parking lots, parking meters, and parking apps)
What "covered" means in plain language
Does your business have to do this? The short answer:
- Yes, if you have 20 or more employees working in NYC, NJ, DC, or Seattle.
- Yes, if you have 50 or more in Philadelphia, the Bay Area, or near transit in the Illinois RTA region.
- Yes, if you have 10 or more in Berkeley or Richmond, CA.
- Yes, if you have 250 or more at a single LA-area worksite.
If you are not in one of these places, you are not required to offer the benefit. Most employers still do, because both the employer (FICA) and the employee (income tax and FICA) save when employees run commuter spending pretax.
State preemption
Several states have preemption laws that block cities from passing their own commuter benefit mandates:
- Alabama
- Arkansas
- Florida
- Georgia
- Indiana
- Iowa
- Kansas
- Michigan
- Missouri
- North Carolina
- South Carolina
- Texas
- Wisconsin
Employers in those states have no local mandate, but the federal pretax option is still available.
What Alice does
Alice runs the program end to end, with connections to ADP, UKG, Paylocity, Paycom, Paychex, Toast, Workday, and 25+ others. There is no up-front employer cost and no manual open enrollment to manage. Employees don't pre-fund. The employer keeps a reserve amount in its Alice plan account; it belongs to the employer and is not a fee.
Talk to sales
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Figures shown are for the 2026 plan year and are set by the IRS. Limits are indexed annually by the IRS.
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