your commuter benefits, made simple
What are Commuter Transit Benefits?
Commuter Benefits are federally approved employer-provided incentives for employees to reduce their monthly commuting expenses for transit, vanpool, biking and parking. Employers can offer employees a range of pre-tax or direct transit benefits, depending on what works best for the organization or company culture and budget.
What are the options for Commuter Benefits?
Benefit Option #1: Employee-Paid Pre-Tax Benefit
Commuter benefits in the form of employee-paid pre-tax deductions are federally approved employer-provided incentives for employees to reduce their monthly commuting expenses for transit, vanpool and parking.
Employees have an option to set aside $130/month in pre-tax funds through their paycheck each month for their transit or vanpool expenses or $250/month for parking expenses. By doing so, taxable income is reduced, which translates to a travel savings of up to 40 percent. As a result, business payroll taxes decrease, so you may see up to 9 percent savings for each employee participating in the benefit.
Benefit Option #2: Employer-Paid Direct Benefits
Commuter benefits in the form of an employer-paid subsidy are federally approved employer-provided incentives for employees to reduce their monthly commuting expenses for transit, vanpool, biking and parking.
Through this option, you can subsidize employee transit, vanpool and bike commuting costs. As with the employee-paid benefit, you do not pay payroll taxes and employees do not pay federal or payroll taxes on the benefit amount. IRS code states employers are able to directly offer employees up to $130/month for transit or vanpool; or $20/month for bicycling benefits.
Benefit Option #3: Employer-Provided Transportation Service
Employer-provided transportation service can include vanpools from outside of DC limits or shuttles from
Metro stations, Park-and-Rides, major hubs or anywhere else employees are commuting.