Commuter Tax Benefits

The tax benefits of helping your employees utilize an alternative form of transportation are many. Here are three ways to take advantage of the tax-savings:

• The employee pays for a transit pass or vanpool seat with pre-tax money. Under Section 132 (f) of the Internal Revenue Code, Qualified Transportation Fringe Benefits allow employees to set aside up to $230 per month pre-tax for transit or vanpool expenses, similar to a flexible spending plan for medical expenses. The employee pays no income tax on the benefit and the employer saves on payroll taxes.
  
  
• The employer pays the cost of a transit pass or vanpool seat and is able to deduct the cost of providing the benefit.
  
  
• The employee and the employer can share the cost of the transit pass or vanpool seat and both share in the savings.

As evidenced by the graphs below, when you offer your employees a
$230 commute benefit versus a $230 salary increase, both you and your
employees come out ahead.