Sponsors (2)
The bill lets employees convert unused commuter benefits into immediate cash and clarifies tax treatment, but it increases recipients' taxable income, can reduce future tax-free transportation benefits, and raises employer compliance costs.
Employees (commuter benefit participants) can take a one-time qualified payment as immediate cash they can spend now instead of leaving funds unused in their account.
Clarifies tax treatment for employers and Treasury so employers can consistently determine what amounts remain tax-excludable under §132.
Employees who receive the qualified payment must include it in gross income, raising their taxable income and potentially increasing tax liability in the year received.
Counting the payment as a reduction to the account balance for future exclusion determinations can shrink employees' future tax-free transportation benefits.
Employers must revise plan administration and IRS reporting to implement the inclusion and carryforward rules, increasing compliance costs for employers (especially small businesses).
Based on analysis of 2 sections of legislative text.
One-time commuter/transportation account distributions within 6 months of enactment are taxable and reduce future tax-excludable account amounts.
Official title: Allow for one-time distributions from certain transportation fringe benefit accounts.
Introduced June 24, 2026 by Kirsten Gillibrand · Last progress June 24, 2026
Treats certain one-time withdrawals from employer-run commuter/transportation fringe benefit accounts as taxable income and requires those withdrawals to be counted when deciding how much of remaining account balances qualify for tax exclusion. Payments must be made within six months of enactment and are limited to the highest account balance during March 13, 2020–December 31, 2023; after the payment they reduce the tax-preferred exclusion available for the remainder of the account.