United States · Benefits · Transportation
Commuter benefit limits 2027.
The monthly pre-tax cap for transit and parking, with what staying under it saves you.
Short answer: For 2027 the monthly limit for transit passes and commuter highway vehicle rides is $350, and the monthly limit for qualified parking is also $350. Both are up $10 from $340 in 2026, so the yearly maximum for each is $4,200.
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The 2027 transit and parking limits
Section 3.18 of Rev. Proc. 2026-35 sets two monthly caps under section 132(f)(2) of the tax code for 2027: $350 for transportation in a commuter highway vehicle and any transit pass together, and $350 for qualified parking. The two limits are separate, so one employee can use both in full in the same month. IR-2026-133 reports both as up $10.
| Benefit | Monthly limit 2027 | Monthly limit 2026 | Yearly maximum 2027 |
|---|---|---|---|
| Transit pass and commuter highway vehicle | $350 | $340 | $4,200 |
| Qualified parking | $350 | $340 | $4,200 |
How the exclusion works
Amounts your employer provides, or that you set aside by salary reduction, up to the monthly limit are excluded from your income and from payroll tax wages. Anything above the limit is taxable wages for that month. The limits are per month, so unused room in one month does not carry to the next.
What changed from 2026
Each cap rose $10, from $340 to $350, which is $120 more of pre-tax commuting per year in each category.
Worked example (2027)
An employee with a $350 monthly transit pass and no parking, in the 22 percent federal bracket, can exclude the whole $350. The saving is $350 x (22% + 7.65%) = $103.78 a month, or $1,245.30 a year. An employee who pays $420 a month for parking can exclude only $350; the other $70 is taxable wages every month.
Common mix-ups
- The limit is not a yearly cap. It applies month by month, and a month's unused room is lost, so $4,200 a year is the ceiling only if you use it every month.
- The transit and parking limits are not shared. You can exclude up to $350 of transit and up to $350 of parking in the same month.
- Money above the limit is not forbidden. You can still be paid or reimbursed above the limit, but the excess counts as taxable wages.
- The 2027 limits are not in effect for 2026 paychecks. For 2026 the limits are $340 a month.
Method
The estimator excludes the lesser of your monthly cost and the $350 limit for transit and for parking separately, multiplies the excluded amount by your federal marginal rate plus 7.65 percent if you tick the payroll tax box, and annualizes it. Amounts over the limit are shown as taxable. It then repeats the calculation with the 2026 limit of $340. Pre-tax commuter benefits depend on your employer offering a plan.
What this does not cover
- Whether your employer offers a pre-tax commuter benefit plan.
- State income tax savings and state rules on commuter benefits.
- Reimbursement for bicycle commuting and other qualified transportation fringe categories.
- Payroll tax effects above the Social Security wage base.
Figures read from the sources below on November 9, 2026. Last updated November 9, 2026.
Sources
- IRS Rev. Proc. 2026-35 (tax year 2027 inflation adjustments), section 3.18 (retrieved November 9, 2026)
- IRS news release IR-2026-133, November 5, 2026 (retrieved November 9, 2026)
- IRS Rev. Proc. 2025-32 (tax year 2026 figures used for the comparison column) (retrieved November 9, 2026)
Frequently asked questions
What is the 2027 commuter benefit limit?
$350 a month for transit passes and commuter highway vehicles, and $350 a month for qualified parking.
How much did the commuter limit rise from 2026?
$10 for each benefit, from $340 to $350 a month.
Can I use both transit and parking benefits?
Yes. They are separate limits, so you can exclude up to $350 of transit and $350 of parking in the same month.
How much tax does the maximum transit benefit save?
At a 22 percent federal rate plus 7.65 percent payroll tax, $350 a month saves about $103.78 a month, or $1,245.30 a year.
What happens to the amount above the limit?
It is taxable wages for the month. The exclusion does not carry over to later months.
When do the 2027 limits start?
For taxable years beginning in 2027, so from January 1, 2027 for a calendar-year employee. The limits for 2026 paychecks are lower.
Where do the limits come from?
IRS Revenue Procedure 2026-35, section 3.18, and news release IR-2026-133 of November 5, 2026.
Not legal or tax advice
These are the IRS figures for tax year 2027 in an unofficial guide that no tax agency runs. A result here is an estimate from the numbers on this page, not a return. Nothing you type is transmitted anywhere. Confirm with IRS forms and instructions or a tax professional before you file.