Tax-Advantaged Transportation Benefits, Well-Traveled
Employers that extend commuter and parking benefits to their workforce can save up to 7.65% on their payroll taxes, and employees that tap into the pre-tax transportation offerings can potentially save more than $1,300 each year.
It doesn’t just stop at saving you and your employees money, either; these programs give employers a leg up in:
- Recruiting and retaining talent
- Building a well-rounded workforce with a broader reach
- Promoting environmental responsibility through shared and public transportation
- Demonstrating a strong commitment to work-life balance
Governed under Section 132(f) of the U.S. federal tax code, qualified expenses include parking and work-related transportation (trains, buses, bikes, subways, ferries, and vanpools).
For 2020, the IRS allows up to $270 a month pre-tax for transportation costs as well as up to $270 a month pre-tax for parking costs.
Your company can save up to 7.65% on payroll taxes as employees use pre-tax dollars to cover their commuting expenses. Example:
- 200 participants spending $270 per month on commuting expenses
- 200 participants x $270 = $54,000
- $54,000 x 7.65% = $4,131/month
- Annual employer tax savings = $49,572
By participating in this program, employees can pay for their commutes with pre-tax dollars and save on income, Social Security, and FICA taxes. Example:
- Employee A does not use his monthly parking benefit
- He purchases a monthly parking pass for $270, reducing his spendable income by $270
- Monthly Savings: $0
- Employee B does use her monthly parking benefit
- She purchases a monthly parking pass for $270, reducing her spendable income by $189
- Monthly Savings: $81*
Pooling with Partners: Uber and Lyft Rideshare Solutions
Through partnerships with Uber and Lyft, ConnectYourCare now offers a door-to-door solution that allows your employees to pay for shared rides with their Commuter Check Prepaid Mastercard®. For added convenience, employees can pay straight from the Uber and Lyft apps after adding their Commuter Check Prepaid Mastercard information as a form of payment.
By combining Commuter Benefits and a custom communication program, a Fortune 100 client netted over $2.5 million in annual tax savings, while helping participants realize an average savings of $1,000 per employee.