Commuter Connect Tax Incentives for Employers

Pre-tax benefits that help you and your employees.

Section 132 (f) of the Internal Revenue Code allows employers to provide tax-free transit, vanpool and parking benefits to their employees. These commuter benefits can be deducted when paid for by an employer (subsidy). Whether you choose to cover the full cost or share the cost – you are helping your employees and you are helping your bottom line. And if your company isn’t able to subsidize a partial cost, you can still offer pre-tax flexible spending accounts for commuting. These accounts are easy to implement, and still save money for both you and your employees. No matter which option you choose, you’re helping your employees, your community and your environment.

Employer Tax Benefits
Employers give their employees up to $255/month to commute via bus; get a tax deduction and saves over providing same value in gross income and/or employers allow employees to use pre-tax income to pay for the bus and employers save on payroll tax.

Employee Tax Benefit
Employee receives up to $255/month tax free and/or employee pays for commute benefit with the pre-tax income and saves on income tax.

Employer Tax Benefits
Employers give their employees up to $255/month to commute via vanpool; get a tax deduction and saves over providing same value in gross income and/or employers allow employees to use pre-tax income to pay for vanpooling and employers save on payroll tax.

Employee Tax Benefits
Employee receives up to $255/month tax free and/or employee pays for commute benefit with the pre-tax income and saves on income tax.

Employer Tax Benefits
Employers give their employees up to $255/month for qualified parking; get a tax deduction and saves over providing same value in gross income and/or employers allow employees to use pre-tax income to pay for qualified parking and employers save on payroll tax.

Employee Tax Benefits
Employee receives up to $255/month tax free for qualified parking and/or employee pays for commute benefit with the pre-tax income and saves on income tax.

On January 1, 2009, the qualified bicycle commuting reimbursement was added to the list of qualified transportation fringe benefits covered in section 132 (f) of the Internal Revenue Service Code. Employers can now reimburse each qualified bike commuter up to $20 per month. This bicycle fringe benefit does not count as part of employees’ wages.

A qualified bicycle commuting reimbursement means that any employer, if they choose to do so, may provide a reimbursement of up to $20 per month for reasonable expenses incurred by the employee in conjunction with their commute to work by bike. The bicycle benefit must come in the form of a subsidy from the employer.

For any employee, a qualified bicycle commuting month is any month the employee:

  • Regularly uses the bicycle for a substantial portion of the travel between the employee’s residence and place of employment, and
  • Does not receive a benefit from their employer for: a bus pass, vanpool fares and parking.

For more information, please visit www.bikeleague.org or www.irs.gov.

Call an Outreach Representative at 317-327-RIDE and we’ll help your company get started.