COMMUTER BENEFITS LAW:
DC organizations with 20+ employees are now required to offer pre-tax or subsidized commuter benefits. Click here
for more information.
Providing tax benefits to your employees to help cover the cost of their commutes is a great way to show your employees their employer cares about them and cares about how they get to work. Ease the stress of commuting and help your employees find new ways to get to work by offering a tax-free transit benefit.
Tax-Free Transit Benefit
As of January 1, 2016, the IRS allows employers to provide up to $255 per employee each month ($3,060 per year) towards commuting by public transportation or vanpool. This unique benefit could save your organization thousands of tax dollars each year and provide employees with an incentive to choose more sustainable modes of transportation.
goDCgo consultants will be with you every step of the way to ensure your organization chooses the best program for them. There are typically three ways this benefit can be implemented.
- Direct: Employer subsidizes employees commuting costs.
Tax-free transit benefits provided as an employer contribution allows you to give your employees up to $255 per month, per employee, in benefits to commute to work by transit or vanpool. You pay for the benefit and receive an equivalent deduction from your business income taxes. Employees receive the benefit completely free of all payroll and income taxes, in addition to their current compensation.
- Pre-Tax: Employee pays commuting costs, tax-free, up to allowed amount.
Typically, a set amount is pulled from employee’s paycheck on a monthly or bi-monthly schedule to cover costs of employees commute to and from work.
- Combination: Pre-tax deductions and direct benefits are combined to cover the cost of employee’s commute to and from work.
Bicycle Commuting Reimbursement
As of 2009, the IRS allows bike commuters to receive a commuter benefit. Employers can provide a voucher or reimbursement of up to $20 per month for purchase of a bike, biking equipment or storage facilities. The employee cannot receive the biking benefit in combination with the transit benefit and it is only to be reimbursed during the months of the year in which he/she regularly bikes to work.
Your goDCgo Employer Services consultant can assist you with promoting and marketing this new and exciting benefit to your employees. The League of American Bicyclists also provides helpful information on how to start offering this benefit.