Congress approved a one year extension through 12/31/2011 of the pre-tax mass transit benefit cap of $230 per month. Without the extension, the monthly maximum contribution would be reduced to the prior limit of $120.
The legislation also extends prior expiring changes to the dependent care tax credit, which has the following impact on dependent care benefits:
- Extends the increased tax credit amount for dependent child care expenses under Section 21 (remains $3000/6000 in lieu of $2400/4800)
- Extends the higher assumed earnings amount for an incapacitated or full-time student spouse (remains $250/500 in lieu of $200/400).
In Notice 2010-94, the IRS delayed the effective date for the transit plan debit card ruling (Revenue Ruling 2006-57) until January 1, 2012: http://www.irs.gov/pub/irs-drop/n-10-94.pdf. The delay is to provide transit systems more time to adapt their technology for compatibility with the requirements for vouchers