Tax benefits for smarter commuting benefit both employees and employers.
Most people would agree that smarter, more environmentally friendly modes of urban transportation are a good thing. However, a lot of commuters need a little extra incentive to adopt new habits. To that end, the federal government recognizes that one of the most effective ways to actively encourage change is to offer financial benefits to those who use smart commuting options. Updates to the U.S. tax codes, which were signed into law in 2015, create a win-win situation for commuters and companies alike.
Under the updated laws, employers can give their employees the option to use up to $255 per month in pre-tax income to cover qualified commuting expenses, including:
- Municipal and regional transit passes
- Vanpool fares
- Parking expenses
This program allows commuters to pay for qualified costs using pre-tax income. In total, each commuter is eligible for a taxable income reduction of up to $3,060 per year. Employers also benefit from the program, since monies dedicated to these costs are exempted from payroll taxation.
Pre-tax Benefit Example
The Santa Rosa Widget Company* has 50 employees using their pre-tax commute program. Each person claims $200 per month in eligible transportation costs. Over the course of a year, their company pays $9,000 less in payroll taxes. That, in turn, easily finances a transportation demand management program. Their TDM program then stimulates even more savings by encouraging more employees to participate. Everyone wins!
These programs also have important trickle-down benefits, which aren’t to be overlooked. Commuters who use transportation other than single-occupancy vehicles report lower levels of stress, an improved sense of well-being, and boosted workplace productivity. Enterprises that are looking for a way to kick-start beneficial changes to company culture would do well to consider the many advantages of these commuter tax benefit programs, many of which are also available on the state level.
Learn more about commuter tax benefits, and add RideAmigos to your smart commuting toolbox.
There are a lot of particular details involved with the commuter tax benefit program. If you’re looking to learn more, this comprehensive document from the Internal Revenue Service is an excellent resource, as is the National Center for Transit Research page on the tax benefits program. Remember, too, that tools like the RideAmigos software platform are excellent for helping commuters connect with a wealth of local transportation options and commute planning resources.
Our software can quickly provide you with positive return on investment in employee commuter programs. Make your smart commuting programs as beneficial as possible – contact the RideAmigos team today.
*Fictional example company. As far as we know, there’s not actually a widget company in Santa Rosa. If you’ve heard of one before, just know we’re not talking about that Santa Rosa Widget Company. 🙂