Transit & Parking Benefits

Commuter Benefits

Commuter Benefits (also known as Qualified Transportation Benefits) are used to save participants money when they travel to and from work. Pre-tax coverage is available for transit, parking and/or bicycling* expenses. Employers may even fund these directly as an added incentive to attract or retain quality employees.

How Commuter Benefits Work:

There are several forms of commuter benefit available – vanpooling, transit passes, parking and bicycling. Transit passes and vanpooling share a single reimbursement limit, while parking and bicycling expenses have individual reimbursement limits. Participants may elect monthly coverage for vanpooling, transit and parking, but may only be reimbursed for bicycle expenses in a month they do not receive another form of commuter benefit.

Funding of chosen benefits can be accomplished in one of three ways. In the first method the employer pays all coverage costs of the participant. The second method a participant to set aside a pre-tax amount from their paycheck to cover expenses. These funds pay for the expense directly and are reimbursed with tax-free dollars. The last option is a combination of the first two, in which an employer pays a portion and the participant funds the rest of the cost through pre-tax dollars. None of these options may exceed the limits established by the Internal Revenue Service (IRS).

The Advantages of Commuter Benefits:

There are significant tax-savings with a commuter benefits plan. These tax benefits increase as the cost of living increases (except for bicycle benefits). Additionally, funding commuter benefits with pre-tax dollars reduces the overall taxable income of participants.

Whether used for subway passes, to cover the expense of a new bicycle or just paying for parking, a commuter benefits plan can save money.

* Bicycling expenses are only reimburseable in certain municipalities.

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