What are Transportation and Commuter Benefits?
Transportation and commuter benefits are employer-provided incentives designed to help employees reduce their commuting costs. These benefits can take many forms, including transit passes, parking subsidies, bicycle commuting programs, and carpooling programs.
Employers and employees can also set aside up to $600 a month in a tax-free Transit and Parking Flexible Spending Account (FSA) account.
FSAs are tax-advantaged accounts that allow employees to use pre-tax dollars to pay for qualified expenses.
Employees can set aside a portion of their pre-tax earnings in an FSA account, which they can then use to pay for eligible expenses throughout the year.
By using pre-tax dollars, employees can reduce their taxable income and save money on their overall tax bill. Plus, since FSAs are funded with pre-tax dollars, the amount employees contribute is exempt from payroll taxes, so employers save money as well.
The maximum pre-tax contribution amount for mass transit (including vanpool) is $300 per month, plus $300 per month for parking (2023 rates).
The covered expenses of this FSA include:
Parking
- Parking a vehicle in a facility that is near the employee’s place of work.
- Parking at a location from where the employee commutes to work.
Mass Transit
- Costs of passes, tokens, fare cards, vouchers, or other items that allow employees to use mass transit for purpose of business commuting.
- Can be a public or a private system used for the business of transporting people.
Benefits of Offering Transportation and Commuter Benefits
Here’s why employers should consider offering transportation and commuter benefits to their employees:
Reduce employee stress
By providing employees with access to subsidized or discounted transportation options, employers can help to alleviate the stress of traffic congestion and long travel times, and make the commuting experience more manageable.
Reduce environmental impact
By encouraging employees to use alternative modes of transportation such as public transit or bicycles, employers can help to reduce the number of cars on the road and reduce overall emissions.
Reduce employees’ financial burden
By providing employees with access to subsidized or discounted transportation options, employers can help to reduce transportation costs and improve the overall financial well-being of their employees.
Improved employer reputation
Companies that are seen as environmentally conscious and socially responsible are often more attractive to job seekers and customers.
