Tax Incentives

Tax Incentives

Tax Incentives

Did you know the IRS allows for Qualified Transportation Fringe Benefits up to $315/mo for transit or vanpool costs and $315/mo for parking costs? Employees can save up to 40% by paying for their transit passes or vanpool fees pre-tax! And employers can save up to 7.65% on their payroll taxes!

Transportation Fringe Benefits

Qualified Transportation Fringe Benefits can come in a few forms.

  • Cash contribution/reimbursement from employers (the money you give your employees will be free of payroll taxes). Limit of $315/month for 2024.
  • Pre-tax payroll deduction from an employee’s salary (employees spend up to 40% less and employers save on payroll taxes). Limit of $315/month for 2024.
  • A combination of a cash contribution from the employer and a pre-tax payroll deduction. Limit of $315/month for 2024.

Read more at Employer’s Tax Guide to Fringe Benefits IRS Publication 15-B (go to page 21) and Section 132(f).—Qualified Transportation Fringe.

Pre-Tax Benefits Administration Providers

Commuter Benefits Solutions by Edenred

“What is the second highest monthly expense, right behind the cost of mortgage or rent? It’s transportation. So, how can you help your employees get the most out of their paychecks? Consider adding one of our Commuter Benefit programs as a low-cost perk for your valued employees.” “By using pre-tax Commuter Benefits, commuters can save up to 40% on eligible transit and parking costs. Companies can save up to 7.65% on their payroll taxes. Commuter Benefits are a win-win!” Read more from Edenred.

Wage Works (acquired by HealthEquity)

“Your company can drive up enrollment by providing commuter benefits that are easy and convenient for employees to understand, access, and use. WageWorks makes it easy for your employees to pay for eligible transit and parking services. One method is the WageWorks® Commuter Card. Employees can use this card just like a debit card where they pay for transit and parking–just swipe and go! Employees decide how much money to load onto their cards, and that money is available for use on the same day as the payroll cycle. Another option is Buy My Pass. Employees identify which transit agency or vanpool provider to buy from, and the pass is delivered to their home.” Read more from Wage Works.

HR Simplified

“A commuter account allows employees to set aside pre-tax funds for qualified mass transit and parking expenses associated with the employees commute to work. The funds are deducted from the employee’s paycheck on a pre-tax basis, reducing the employee’s taxable income. The employee can elect up to $280 per month for parking expenses and up to $280 per month for transit expenses.” Read more from HR Simplified.