Confused about what is the transit benefit program? Let’s dive right in.
Transit benefit programs provide transportation benefits for commuters. Different municipalities and other governments have slightly different variations on what is a transit benefit program.
What each has in common is a reimbursement component to employees to encourage them to use mass transit. Employees are also eligible for the benefit for qualified paid parking. Below we answer the most frequent questions, take a look:
What are transit benefits?
In general, transit benefits, also known as commuter benefits, let employees get a “discount” on commuting costs.
Commuters can save up to 40 percent of the costs for subways, buses, rideshares, ferries, parking and other means of commuting. Employees are allowed to save up to $265 per month for transit benefit programs.
The savings come because employees save money from their paychecks tax-free. We have a cool calculator that can give you an idea of your potential savings.
The tax-free dollars are set up on a voucher, debit card or paid directly to a transit or parking company.
How it works for employers?
Employers also get in on the savings. Since employees are saving tax-free money in their paychecks, employers see the payroll tax bill decrease up to 7.5 percent. Here you can calculate the payroll tax savings for your company.
There’s not a lot of paperwork for employers, and they can use a service like Commuter Benefits Solutions to administer the program to ensure it runs smoothly and within full compliance of the IRS.
What are there transit benefits programs?
Currently, there’s a mix of transit benefits programs in the United States.
The IRS allows what’s considered a “fringe” benefit. This law governs transit benefits not found in municipalities. For the IRS benefit, commuters will get the $265 per month for transit passes and qualified parking.
Some cities and governments have transit benefits programs. There are transit benefit programs in the following cities: Chicago, Seattle, New York City, Washington, DC, San Francisco, Berkeley (CA), Richmond (CA). Los Angeles is working on its transit benefit program.
The San Francisco area also features transit benefits programs for both the San Francisco Airport, and a nine-county program for San Francisco Bay Area employers with 50 or more full-time employees.
The federal government has a transit benefits program for its employees.