Commuter benefits can help cover eligible work-related transit fare for trains, buses, trolleys, ferries, vanpools, and rideshares like UberPool and Lyft Shared, by allowing employees to set aside money before income taxes are taken out to put toward those expenses. Employers may also help cover parking benefits, which includes parking at or near work, as well as parking at a location where employees are connecting to another form of transportation for work, such a commuter train stop. In 2021, commuters can set aside $270 dollars pre-tax each month for eligible transit expenses and up to $270 for parking expenses.
Employers can choose to offer a reloadable, prepaid card or a payment voucher that participants can use to make transit or parking payments. Alternatively, employees can sign up online to receive a transit pass that renews automatically each month and is sent by mail.
Commuters can manage it all, quickly and easily on our Commuter Portal. They can also maintain their account, view any credit amounts, and load funds onto a transit card. It’s also possible to place orders for commuter products or set up recurring orders online.
A huge advantage of this benefit is flexibility. Employees can sign up at any time—not just during open enrollment—and can contribute as much as desired, up to the limits set by the Internal Revenue Service (IRS).
Depending on where employees live in relation to the office, commuting costs can really add up over the course of a year. Monthly transit passes, rideshares, parking—these can be expensive, which is why offering commuter benefits can be a huge help for employees by allowing them to pay for work-related transit and parking with pre-tax money. Assuming a tax rate of 30%, a commuter maxing their pre-tax contributions for transit could save up to $81 dollars per month in taxes. If that’s a standard monthly spend, that could mean savings of $972 each year.
Consider this scenario: Kate and Jessica take the subway into work each day together. Jessica, who enrolled in commuter benefits, isn’t paying taxes on her subway fare. Kate, who hasn’t yet signed up, is paying her fee in full. Jessica has money left over to buy an overpriced coffee. Kate does not. As a result, Jessica has more focus, so she gets that big promotion.
All dramatics aside … enrolling in commuter benefits saves employees money each month, just for doing something they were going to do anyway! And it’s not just employees who save—by reducing taxable income, employers in turn reduce their FICA tax responsibility. It’s a win-win! Employers that offer commuter benefits can also gain in edge when competing for new talent and can help with retaining employees. Best of all, it’s easy to set up and get started.
Find out how to customize a commuter benefits solution that suits your needs today.