Qualified Fringe Benefits

Reference Number: NFC-25-1755185438
Published: November 18, 2025
Effective: Pay Period 01, 2026

Summary

The projected monthly limitation for the qualified transportation fringe benefit and qualified parking fringe benefit is $340 each for tax year 2026. This limit reflects an increase from previous years and is determined using cost-of-living adjustments.

Implementation

Agency Paid Subsidies

Internal Revenue Service (IRS) regulations state that employee parking subsidies over $340 and transit subsidies over $340 are considered taxable fringe benefits. There are two possible options for reporting a parking or transit subsidy fringe benefit in excess of the IRS limit as follows:

  1. Allowance Type 179, Parking Fringe, can be used to record the taxable portion of this fringe benefit. The amount entered in the Allowance Rate field will be reported each pay period until deleted. The allowance record can be processed via one of the following methods:
    1. Web-based Entry, Processing, Inquiry, and Correction System (EPIC Web), Payroll Document, Allowances.
    2. EmpowHR, Payroll Document Menu Group, Allowances Component.
    3. Agency Front- End System Interface (FESI), Allowance Document 127, Data Record Layout.
  2. Agency Time and Attendance (T&A) solutions may be used to record the taxable portion of this fringe benefit using the following transaction codes:
    1. Transaction code (TC) 17, Suffix 09, Parking/Taxable Fringe.
    2. TC 17, Prefix 10, Transit Subsidy.
    3. TC 17, Suffix 08, Chauffeur Driven Auto.

Note: When entering TC 17 (Suffix 08 or 09, or Prefix 10) on the T&A, the benefits may be recorded biweekly, monthly, quarterly, semiannually, or annually (in accordance with Agency policy) and must be reported by the end of the tax year.

Note: Agencies should not enter employee parking or transit subsidies using both the T&A and Allowance Type 179 (EPIC Web, EmpowHR, or FESI) processes. If more than one method is used, the T&A will be suspended. Therefore, timekeepers should check with their servicing personnel office before this information is entered on the employee’s T&A.

Employee Paid Subsidies

In situations where the Agency does not pay the employee’s transit or parking subsidy, the employee can report their payment of a transit or parking expense as pretax on their taxes. This is handled via the processing of an allowance record with Allowance Type 525, Transit Benefits (Non Taxable), and Allowance Type 526, Parking Benefits (Non Taxable). When using EPIC Web, EmpowHR, or FESI to enter these benefits, the amount entered in the Allowance Rate field will be reported each pay period until deleted. The allowance record(s) can be processed via one of the following methods:

Inquiries

For questions about National Finance Center (NFC) processing, authorized Servicing Personnel Office representatives should contact the NFC Contact Center at 1-855-NFC-4GOV (1-855-632-4468) or via the customer service portal at ServiceNow for Federated Users and at ServiceNow for Non-Federated Users.