Commuter Benefit Solutions Blog

How Pre-Tax Commuter Benefits Work

Posted by the Commuter Benefit Solutions Team February 08, 2018

SavingCommuterBenefits.jpgA pre-tax commuter benefit is when employees can have the monthly cost of their commute deducted from pay before taxes which means more take-home pay and for employers, saving on reduced payroll taxes. 

How Employees Save in a Pre-tax Program?

When an employee enrolls in a pre-tax commuter benefits program, they will provide the amount of their monthly commuting cost for transit and/or commuter related parking up to the monthly limits. By using pre-tax dollars, employees are saving 40% on their commuting costs.

The tax-free commuting dollars are provided on a product, like vouchers, smart cards, debit cards, or paid directly to transit and parking operators, to cover all commuting options and to ensure compliance with the IRS rules for commuter benefits. Right now, employees can use up to $265 a month for transit, and the same amount for commuter related parking.

Commuter Benefits 101 Guide  Learn How Commuter Benefits Work

What commuting costs are covered?

  Train
  Bus
  Ferry
  Rideshare (Uber Pool, Lyft Line)
  Parking
  Biking

How Employers Save Offering a Pre-tax Program ?

By offering employees a pre-tax commuter benefit program, the cost of commuting deducted for employees reduces the amount of payroll being taxed. This means a savings of up to 7.65% on average, on payroll taxes. The more employees that enroll, the greater the savings. 

Why you should offer commuter benefits to your employees?

 Employees save on commuting costs while employers save on payroll taxes.

 A great benefit that helps attract, retain and reward employees.

 Easy, hassle-free sign up leaves more time for other important tasks

 Helps create a happier, less stressed and productive work environment

Ready to start saving? We can help. Commuter Benefit Solutions offers programs designed for large, national organizations, medium-sized companies and small business. Each offers a full range of products for employees and specialized commuter benefits support and service for employees and employers. 

Learn 5 Steps to Starting a Commuter Benefit Program. Download our free guide now! 

5 Steps for Starting a Commuter Benefits Program

Topics: Commuter Benefits 101