Pre-Tax Commuter and Parking Benefit Programs

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 2021, 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.

Employer Savings

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

Employee Savings

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*

Through Uber, commuters can apply their pre-paid commuter funds toward uberPool, an on-demand ride-sharing service.