This year, commuters who use New Jersey TRANSIT Park and Ride lots may have noticed that their parking costs increased. At some lots, the price hike has jumped up to an additional $2 per day! While the state justifies its decision as fair since it’s the first price increase in a decade, employees who use NJ TRANSIT parking for their commute to work will likely feel the impact of the higher parking fees on their wallets.
In fact, all around the country, parking costs can quickly add up over the course of a year. One study found that the average American car owner may spend as much as $3,000 annually in parking-related expenses. Add to this the fact that 85% of workers depend on a motor vehicle for at least part of their commute, and you can imagine how money spent on parking for work could become a pain point in their daily life.
How can employers address the burden of parking expenses and improve employee morale at the same time? With a commuter benefits program that includes parking, of course!
Get Ahead of the Curve with a Commuter Benefits Program at Your Company
There is a silver lining for workers in New Jersey facing the rise in parking fees. Earlier this year, New Jersey Governor Phil Murphy signed into law the nation’s first statewide commuter benefits law, which mandates that employers with 20 employees or more must offer a tax-advantaged commuter benefits program to offset commuting and/or parking costs. The law goes into effect in 2020 and could be a model that other states follow. Cities like San Francisco, Seattle, and New York have introduced commuter benefits laws starting as far back as 2009.
No matter your location, you can do your part in providing some relief for potential parking cost increases. A commuter benefits program can be established/set up any time during the year.
The Ins and Outs of the Parking Allowance
A commuter benefits program offers an employee up to $265 monthly as a pre-tax parking allowance they can use to pay for parking expenses, in addition to the $265 for pre-tax transportation expenses, for a total of up to $530 a month toward commuting costs. For employees who utilize both the parking and transit allowance, they have the potential to save up to $159 a month in taxes and as much as $1,900 a year.
Eligible parking expenses include:
Parking at or near a place of employment
Parking at a location from which commuters connect to another form of transit
Parking-related expenses that are not covered by commuter benefits programs include:
Parking at an airport during a business trip
How Can Employees Spend Their Parking Allowance?
Commuter benefits providers like ConnectYourCare make it easy for employees to spend their monthly parking funds with flexible payment options such as:
A rechargeable debit card
Direct payment to a parking garage for monthly fees
This can all be done through the myCYC Portal with a simple user interface and step-by-step instructions to help employees enroll in the program and choose the benefits options that best meet their needs.
Two-Way Street: When Employees Benefit, So Do Employers
Both employers and employees win when commuter benefits are in the picture. An employer offering commuter benefits can save 7.65% in payroll taxes by reducing the overall taxable income of employees.
To put this into perspective, say you have 200 participants in your commuter benefits program who spend $265 per month on parking expenses. Their total monthly pre-tax spending is $53,000, which means you as their employer save $4,054.50 per month thanks to the reduced payroll tax amount. This can add up to an annual tax savings of $48,654 for your company just by offsetting employee parking costs. (Let’s not forget that those savings can be even higher when pre-tax transportation benefits are factored in!)
Put It in Drive: How to Encourage Participation in a Commuter and Parking Benefits Program
Increasing employee participation in benefits programs can be a challenge as an employer. Maybe you haven’t found a commuter benefits provider you like or you’re looking to increase enrollment. Whatever the case may be, we have some ideas to encourage employee engagement with your commuter benefits program:
Hold benefits information sessions for employees to learn about their options. You can use resources like ConnectYourCare’s Commuter Academy, which breaks down commuter and parking benefits with engaging educational tools.
Streamline enrollment to make it easy for employees to sign up for benefits using online tools and videos that explain how to place orders. ConnectYourCare provides a simple, user-friendly interface to help employees select their transit and parking allowances.
Offer flexible payment options for parking and transit costs to meet a range of needs. People may hesitate to join the program if they think it will complicate their lives further, so be sure that they know they have a say in how they pay!
As an employer, you can help reduce the financial and emotional impact of the daily commute, and the burden of rising parking costs, by offering a commuter benefits program.