Check with your company benefits department or website or reach out to HR. Here are some of the most common ways employers help their workforce save on commutes. Commuter benefits play a crucial role in supporting employees’ commuting needs while promoting environmental sustainability and reducing transportation costs. By understanding the various types of benefits, their advantages, and the legal framework surrounding them, employers can design and implement effective commuter benefits programs. As the workplace continues to evolve, staying attuned to emerging trends and adapting commuter benefits accordingly will be essential for fostering a happy, healthy, and productive workforce. Another option for providing a flexible commuter benefits program is to offer a commuter and transportation employee stipend.

Financial Well-being

Employees can use the funds on qualifying expenses, such as public transportation and parking fees. Yes, implementing a commuter benefits program can improve employee retention by reducing commuting costs and stress, thereby increasing job satisfaction. These passes can cover the full cost or a portion of the cost of public transportation. By offering transit passes, employers can simplify the commuting process for their employees, making it easier for them to choose public transportation over driving. Instead of setting up an account, some employers will give you a monthly or yearly stipend for commuting costs. Depending on the company, you might get money upfront with a debit card to pay for expenses, or you might get reimbursed for commuting costs.

As of 2024, the IRS has set a monthly contribution limit of $315 for transit and parking expenses. An employee can choose to contribute $315 for transit expenses and another $315 for parking expenses per month if they wish. The contributions are usually deducted from employees’ paychecks.

To learn more about employee incentive program ideas, please check our blog on the matter. Since understanding every facet of a work benefit is essential to getting the most out of it, we’ve compiled an FAQ that covers the most important aspects. Views expressed are as of the date indicated, based on the information available at that time, and may change based on market or other conditions. Unless otherwise noted, the opinions provided are those of the speaker or author and not necessarily those of Fidelity Investments or its affiliates. Fidelity does not assume any duty to update any of the information.

Business payments

For driving costs, don’t forget to consider tolls (and whether toll-free routes are available), wear on your car, parking, and gas prices. It’s possible that your employer benefits will only cover public transportation passes, not gas or parking, so factor that in too. Maybe the most cost-effective way isn’t your favorite way to get to the office—that’s OK. You could still sprinkle in a budget commute once or twice a week to spend less on average. The basis for these requirements is almost always the number of employees a business has.

Commuter benefits funds are accessible with a valid debit card or a transportation voucher. This is far more convenient than finding enough money for public transit. The sheer number of transportation options gives employees a broad range of choices for using their commuter benefits funds. After signing up for the commuter plan, employees decide how much of their pre-tax funds to contribute each pay period.

Commuter benefits are compensation perks to help employees save money by taking sustainable transportation, such as public transit, bicycling, rideshares in electric cars, and so forth. Commuter benefits allow employees to use pre-tax dollars on commuting expenses, which reduces their taxable income. Commuter benefits are a pre-tax program that allows employees and employers to save money. For employees, commuters set aside money in their paychecks tax-free every month to pay for commuting costs. Seattle has implemented a comprehensive commuter benefits program for its employees, including transit passes, vanpool subsidies, and biking incentives. The program has resulted in increased use of public transportation and reduced traffic congestion in the city.

Are employers required to provide commuter benefits?

Now, as the leader of Meditopia’s Member Happiness Team, I write about evolving trends in employee benefits and their impact on engagement. Use pre-tax payroll deductions to set aside £100 monthly for train fares. For example, if most of your team members go to work on their bikes, it’s likely that the most appreciated benefit is related to bike rentals or bike maintenance. While if most of them go to work on their cars, they would appreciate the most parking subsides.

• If you’re doing it alone, think about whether you have time for setup and administration or if you’d rather use an outside service to manage it.
• Instead of providing parking spaces, employers can offer cash incentives to employees who choose not to drive.
• For example, an employee can’t use transit benefit funds to pay for things like gas or car insurance.
• But no matter which benefits you decide to offer, commuter benefits are a great way to improve employee retention and provide them with some financial relief.
• Employers may also provide facilities such as bike racks, showers, and lockers.

Keep Your Remote Employees Engaged With Employee Benefits

• These 2025 limits are each up $10 from the 2024 transportation expense and parking expense limit of $315.
• Yes, employer-paid commuter benefits such as transit passes and parking subsidies are typically tax-deductible in the UK, providing significant tax savings for businesses.
• Consult with your employer to find out what those limitations might be.
• Performing a cost-benefit analysis of commuting costs is essential to determine the financial feasibility of offering commuter benefits.

Because you’re not paying taxes on the money you contribute, you’re able to lower your taxable income and have more funds to use on eligible expenses. Participating in a pre-tax commuter benefit plan allows both employers and employees to reduce their tax liabilities. By setting aside pre-tax dollars for eligible commuting expenses, employees can potentially achieve significant savings each year.

The IRS also allows for reimbursement of qualified transportation expenses using tax-free dollars. However, going this route can limit the eligible monthly expenses you can reimburse your employees for. Some local governments offer commuter plans to organizations and their employees, but usually, employers establish them as part of a benefits package. These benefits can be pre-tax or taxable, with many organizations electing to follow guidance from the Internal Revenue Service (IRS) for providing qualified transportation benefits. Commuter benefits are a perk some companies offer employees to make getting to and from work a little more affordable. Each company’s benefits may look different, but it could mean free money toward your commuting costs, tax advantages for spending on commuting, or discounts on local mass transit.

Parking expenses could include costs for meters, parking garages, and lots. Commuter benefits plans can help businesses thrive, allow employees to save money and effort, and drive substantial environmental improvements. When managed effectively, commuter benefits plans can improve life both in and outside the workplace. With a comprehensive and generous plan in place, companies can effect change in a myriad of ways.

Take advantage of credit card points

Transportation benefits and perks can be an excellent addition to your compensation package. Many types of commuter transportation benefits are available, including transit and parking passes, commuter highway vehicles, eligible computer benefits cards, and many other possibilities. If you are using payroll software, enter the employee’s contribution amounts as a pre-tax deduction. That way, you can withhold the correct amount of taxes, pay the employee, and add their contribution to their commuter benefits plan. Offering commuter benefits provides tax savings for employers, too.

Commuter plans are usually offered as part of employee benefit packages. In most cases, they are presented to employees during open enrollment periods when they can opt in or out. Any business with ten or more employees must offer its staff a commuter program that encourages employees to use public transit, eligible vanpool services, or bicycles. Qualified parking expenses only include parking on or near the location of your workplace or somewhere your employees can commute using mass transit or carpools, like a park-and-ride. Some allow you to provide upfront benefits while you can reimburse your employees for eligible expenses with others.

In many cases, if a company has more than 20 employees on its payroll, it commuter benefits meaning must offer commuter benefit plans. Facebook provides a variety of commuter benefits, including free shuttle services, biking incentives, and pre-tax transit options. The company’s focus on employee well-being and sustainability has contributed to high employee satisfaction and retention rates. Parking benefits involve employers offering pre-tax parking benefits that cover the cost of parking at or near the workplace or at park-and-ride locations. This is especially useful for employees who drive to work but need to park their cars in paid parking lots or garages.

Employers may reimburse employees for ride-sharing expenses, subsidize carpool programs, or provide dedicated parking spaces for carpooling employees. Some companies also facilitate carpool matching among employees. Pre-tax benefits are deductions made from an employee’s gross income before federal taxes, Social Security, and Medicare are applied. These deductions lower an employee’s taxable income, which in turn reduces the amount of taxes they owe. If employers have 50 employees participate for 12 months, the business can save over $24,000 annually. Employees can save $700 each year if they set aside the maximum amount of money for transit expenses each month.

Companies may also reimburse staff for the mileage they drive between two places of work or other business functions. Many organizations choose to follow the IRS’s standard mileage rate to reimburse employees, which is 67 cents per mile for tax year 2024. For charities, the rate is 14 cents per mile, and for medical usage or military moves, it is 21 cents per mile. Philadelphia and Chicago set a minimum of 50 employees, whereas Berkeley, California, mandates the option for businesses with just 10 employees or more.