Commute options programs can have a positive impact on your payroll tax liability. Federal Tax Code allows employers to provide tax-free transit and vanpool benefits for their employees. Taking advantage of these benefits is easy and programs can be set up at any time.
There are three Commuter Choice options, each one offering benefits to you and your employees
- Employees Pay and Save (Pre-Tax Payroll Deduction): Similar to health savings plans or eligible childcare expenses, employees can set aside up to $230 per month out of their pay, then use those pre-tax dollars to pay the cost of qualified commuting. Employees save on federal income taxes and payroll taxes.
- Employer Pays and Saves (Tax-Free Employee Benefit): The employer chooses to cover the full cost of the tax-free benefit – up to $230 per month for transit and vanpool expenses or $20 for cycling. The benefit is offered tax-free to employees and lowers payroll taxes for both the employee and the employer.
- Employee & Employer Share the Cost: The employer and employee each pay a share. For example, your employer might offer $100 per month in transit/vanpool benefits and allow employees to reserve up to $130 per month as a pre-tax benefit. The total tax-free benefit remains $230 per month. The same rules apply for the $20 per month bicycling benefit.
Georgia Commute Options offers additional information about the tax benefits of supporting commute options. To learn more about the tax benefits available for your company or to set up a program, contact Nicole Smith, Nicole@livablebuckhead.org or (404) 842-2694.
Note: The information presented here does not constitute official tax guidance or a ruling by the U.S. Government. Taxpayers are urged to consult with the Internal Revenue Service of the U.S. Department of Treasury or a tax professional for specific guidance related to the Federal tax law.