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Commuter Choice is a federal program that subsidizes employers who pay a stipend for their employees to get to work using public transportation. It is a provision of the Internal Revenue Code that permits an employer to pay for an employee’s cost of commuting to work, in other than a single occupancy vehicle [(26 USC 132(f)].
Basically, employers get a tax break for getting their employees to work using public transportation.
Commuter Choice Tax Benefit
IT PAYS TO RIDE PUBLIC TRANSPORTATION
The Commuter Tax Benefit program allows employers to give their workers up to $255 each month for transit or vanpool commuting costs as a tax-free benefit. It also allows employers to give employees the option to use payroll deductions to avoid paying taxes on up to $255 a month in commuting costs. Alternatively, employers can share these costs with their workers by paying part of their monthly commuting costs and letting employees pay the balance using pre-tax dollars. This results in a tax savings for commuters and a reduced taxable payroll for employers.
As of January 2016, federal tax law allows commuters to set aside up to $255 per month of their salary before taxes to pay for transit or vanpool fares, which is finally equal to the amount allowed for qualified parking.
Commuter tax incentive programs are making a difference to thousands of commuters. In addition to monetary rewards, participants enjoy a less stressful commute and take satisfaction in knowing they are helping relieve congestion and reduce the environmental impact of driving alone to work.
- Employer-Paid Benefit
Employers offering full transit breaks for employees can take full advantage of this federal tax break. In Chatham County, the total cost of a CAT Monthly Pass is fully deductible for employers, as the cost is less than $255 per month. The cost for the employer is tax-free and deductible as a business expense.
- Employee-Paid Pre Tax Benefit
With this option, employee pay for the entire cost of monthly transit with pre-tax dollars of their salary.
- Fare Share Benefit
The employer pays a portion of the cost and the employee pays the remaining portion before taxes.
Email our Marketing & Business Development department or call (912) 629-3916 to find out how Commuter Choice can help your employees get to work. Or visit our Employer Programs page to learn about customizable pass programs.
For more detailed information about the federal program, download the Commuter Choice Brochure.