As of February 2009, employees may set aside up to $230 a month of their salaries before taxes to pay for transit and vanpool fares, up to $230 per month for qualified parking expenses at or near an employer's work site from which the employee commutes via transit or vanpool, or a combined amount of up to $460 per month for both.
Employers also may offer employees the option of setting aside a portion of their pre-tax income via payroll deduction, allowing employees to purchase transit passes or to pay for vanpool fares themselves. The Commuter Tax Benefit is available only through an employer-sponsored commute benefit program and is easy to set up.
You, the employer, also can choose to split the cost of purchasing transit passes or paying vanpool fares with your employees. You cover a portion of the cost directly and your employees cover the rest out of pre-tax dollars.
(Federal tax law allowances)
See the Commuter Tax Benefits Summary Table
for options available to employers and employees. Make sure to consult your corporate accountant or tax attorney.
What Transportation Services Qualify?
Transit services that are publicly or privately owned or operated and employer-provided or employer-sponsored vanpools qualify under the tax-exempt program.