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Commuter Tax Subsidies and Vanpools

New commuter benefits programs can generate major tax savings for both individuals and businesses.

In 2015, the federal government updated its tax codes, increasing the amount of monthly pre-tax income that can be put toward qualified commuting expenses. Under the new laws, commuters can use up to $255 per month in pre-tax income to cover parking costs, use of public transit, and vanpool fares.

This commuter benefits tax program takes advantage of a proven transportation demand management strategy: people are more likely to adopt positive behavior changes if they are financially rewarded for doing so. Under the new tax laws, commuters are eligible for reductions of as much as $3,060 in taxable income. Businesses also reduce their payroll tax liabilities by reducing the total amount of taxable income paid out each month. This adds up to some major savings, especially for those who max out their eligibility year in and year out.

Even better, there’s another angle for businesses to consider. Companies that run vanpools as part of their enterprise rideshare programs have the option of shouldering the cost of the service themselves, which creates some added flexibility.

Vanpool enterprise rideshare solutions qualify for commuter tax benefits programs, and can be applied in multiple ways.

The general gist of this alternate strategy is fairly simple: instead of deducting vanpool fees from employees’ pre-tax income, companies can instead pay for the vanpools themselves, then make the corresponding adjustments to the base pay of employees that use the service.

While it might seem counterintuitive to spin a reduction in an employee’s base pay rate as a financial incentive, this option actually offers some advantages over the standard way of doing things. Thus far, most companies have had employees pay out-of-pocket for access to enterprise rideshare services, then claim the commuter benefits on their tax returns.

By contrast, the base pay reduction method eliminates the need for employees to track their vanpool expenditures and complicate their tax returns, making it a simpler and more accessible option. Regardless of which method you use, the bottom-line benefits are the same, for both employees and businesses.

The RideAmigos software platform is a valuable addition to any enterprise rideshare program. To learn more about how it can benefit your business, get started with RideAmigos today.

(Photo Credit: Oran Viriyincy)

Partner Highlight – WayToGo

Here at RideAmigos we’re always excited to see how our partner organizations are making the most of our commuter management tools. This month we’re featuring our partners at the Denver Regional Council of Governments and their WayToGo program.

WayToGo is transforming transportation for thousands of Denver-area commuters

RideAmigos is pleased to be the official provider of transportation demand management software for Denver’s WayToGo program, providing the power behind their MyWayToGo system. The WayToGo program is a regional partnership that pairs the Denver Regional Council of Governments with several local transportation management associations (TMAs) to provide local residents and commuters with a growing list of smart commuting options.

The key focus of the WayToGo program is to make alternative modes of transportation and commuting more accessible to area residents across as many demographics as possible. WayToGo applications serve both the public and private sectors in the Denver area, and current programs include:

  • Regional rideshare matching tools that pair commuters with local carpools and vanpools
  • Schoolpool programs that enhance school zone safety and offer students dependable two-way transportation on every school day
  • Practical support and resources for local cycling, walking, carshare, and flex-work initiatives

WayToGo also partners with local businesses to help build commuter programs that encourage more people to choose alternatives to single-occupancy vehicles. The program is also a proud partner and co-organizer of Denver’s annual Bike to Work Day.

Consistent year-over-year performance improvements bode well for WayToGo’s future

The WayToGo program has been generating impressive results since its inception, including an impressive string of years in which the program’s vehicle miles traveled (VMT) savings have increased. From 2014 to 2015 alone, WayToGo saw a 9 percent jump in VMT savings, rising from 12.8 million in 2014 to just under 14 million the following year. Projections indicate these trends will continue into the foreseeable future.

Also of note in 2015:

  • The number of WayToGo-registered vanpools increased by 13 percent, to a total of 114 throughout the Denver metro area
  • 17,890 families were enrolled in WayToGo’s schoolpool program by year’s end, marking a 6 percent increase
  • 1,018 employers provided Guaranteed Ride Home taxi vouchers to 119,500 local commuters who elected to bike, walk, carpool, vanpool, or take transit to work
  • Overall participation in Denver’s Bike to Work Day rose 12 percent year-over-year, and included 32,805 participants

WayToGo is currently focused on four primary initiatives: increasing awareness, boosting the number of registrations, encouraging more commuters to commit to alternative modes of travel, and making smart commuting a bigger part of the local commuter culture.

The RideAmigos software platform has been a major supporter of the WayToGo program’s sustained success, with our comprehensive range of end-user features and administrator planning, tracking, and reporting tools.

Does your organization want to have a bigger impact on how commuters think of and use transportation? Contact RideAmigos today for a free analysis of your commuter programs.

What are Vanpools?

Vanpools are quickly emerging as a popular form of smarter commuting.

The vanpooling phenomenon is continuing to gain momentum, especially in major cities with a dense concentration of commuters. As a solution to helping people skip the solo drive, vanpools are a relatively new entry in the smart commuting lexicon. Therefore, people often have questions about what they are and how they work. We’re here to help!

Vanpool essentials:

  • Vanpools are made up of a group of commuters traveling from one or more origination points to a shared destination.
  • Most vanpools include between about 7 and 15 people.
  • Vanpools typically have one or two pickup locations, which frequently include designated transit stations or park-and-ride commuter lots.
  • At the end of the work day, vanpools provide return transportation to the original pickup location(s). From there, commuters can then make their way home.

Vanpools can be used just about anywhere, but they tend to be most effective in areas where long-distance commutes are common and public transit options are limited. They’re also an excellent option for companies located in remote or outlying areas that are only accessible by privately operated vehicles. Providing vanpool service to and from such locations helps these businesses attract and retain employees while making the daily commute easier and more manageable for employees.

Commuters and employers enjoy many benefits by using vanpools:

  • Cost savings and reduced wear and tear on privately owned vehicles.
  • Reduced commuting time.
  • The ability to talk, eat, read, work, or rest during the journey.
  • Reduced on-site parking requirements and associated cost savings.
  • Improved employee job satisfaction and productivity.

Use dynamic new technologies to make the best use of local smart commuting resources.

Employers typically administer vanpools themselves or contract with a service provider. Some have a high level of involvement, actively promoting vanpooling as a preferred commuting option. Meanwhile, others simply offer them as an alternative to interested employees. Regardless of how involved a given employer is in a particular vanpooling program, commuter management software like RideAmigos can provide convenient, effective, and easy-to-use management capabilities.

The RideAmigos transportation demand management platform offers extensive support for enterprises that offer vanpooling Vanpool support works seamlessly alongside many other features that are helping transform the way we access and use urban transportation. You can use our platform to create a new vanpool group, connect riders, track usage and stats, plan routes, and much more.

Contact us today to get started, or sign up to view our free video demo.

Photo Credit: UCLA Transportation