What if my fare media or vanpool vouchers or passes arrive but then are misplaced or lost? No, the Commuter Card can only be used to pay for commuter costs at transit provider vending machines and online. If the card is used at an unapproved merchant, the transaction will be declined. The Office of the State Comptroller (OSC) takes two equal deductions from your biweekly paycheck to cover the cost of your transit pass. In three-pay-period months, OSC will not take a deduction from the third paycheck. Many employers offer a “run-out” period, which is a window of time after the termination date during which an employee can submit claims for reimbursement.
Parking Assistance
For employers and employees, benefits that qualify as transportation fringe benefits are not a part of an employee’s taxable wages. These commuter benefits are what are commuter transit tax benefits and how do they help me now exempt from federal income and payroll taxes. Pre-tax commuter benefits allow employees to deduct their monthly commuting expenses from their paycheck.
What are commuter benefits?
In 2025, the monthly exclusion for qualified parking is $325 and the monthly exclusion for commuter highway vehicle transportation (vanpool) and transit passes is $325. Employers who offer this program help their employees lower commuting costs while also benefiting from payroll tax savings. By participating, employees can allocate pre-tax funds to pay for parking, transit passes, or vanpools, making sustainable commuting more financially viable. The idea was to recognize commuting as a necessary expense for employment while encouraging public transportation. For every dollar put into pre-tax commuter benefits, the employer saves on their share of FICA taxes (7.65%).
Input the number of participating employees to see the potential payroll tax savings.
The Legislature and Unified Court System also contribute on behalf of their employees. As such, their FICA liability (tax for Social Security and Medicaid) is $382.50 ($5,000 x 7.65%). This means both the employee and employer pay $382.50 per month towards Social Security and Medicaid.
Therefore, the NYS-Ride reduction of social security taxes could slightly reduce Social Security benefits for people below the Social Security wage maximum. NYS-Ride orders do not reduce contributions or benefits under your retirement plan, life insurance, or Medicare. The Metropolitan Transportation Authority (MTA) in New York City is transitioning from issuing physical MetroCards to the new contactless fare payment system called OMNY. The MTA will no longer offer new MetroCard products to commuter benefit providers.
Why do Companies Offer Pre-Tax Transit Benefit Programs?
We had touched on commuter benefits in a previous article, but quickly realized that the topic was too important to not expand on. From a high level, commuter benefits are categorized as a ‘qualified transportation fringe benefit’ by the IRS. This allows employees and employers to use pre-tax dollars towards commuting expenses which varies based on cost-of-living adjustments. For 2021, the IRS released guidance for employers that increased the monthly maximum limit from $265 to $270.
- All in all, commuter benefits help you attract employees because they are fringe benefits — small but meaningful perks that come with working for the company.
- Remote or hybrid work arrangements may help an employee reduce their transportation expenses by allowing them to skip their daily drive or train ride to work.
- However, your combined contribution must be below the IRS contribution limits, explained later.
- Fortunately, employers have just as many reasons to support employer benefits as employees and transit agencies.
- Additionally, refunds cannot be issued for any unused pre-tax deductions after you leave state service.
Your entire staff doesn’t live in the same building, have the same commute, or the same personal life. Offering flexible work hours lets your employees know you value their time in and out office. Learn how transit agencies can team up with employers to boost ridership and keep transit affordable.
- Artificial intelligence has been growing very quickly in the last few years and is expected to improve other industries such as healthcare, manufacturing and customer service.
- If you retire, resign, or end your employment with the State, you will not be eligible to take part in the NYS-Ride program.
- It’s brilliant from a business perspective, even if it’s questionable public policy.
- We’ve covered this topic for quite some time — everything from bikeshare, scooters, pre-tax benefits, and more (even which podcasts to check out during your trip).
What can transit agencies do to encourage commuter benefits?
For the days when weather permits, this is actually my most cost-effective option. Their analysis made it super clear why these benefits exist – in my case at least, the tax benefit actually DID change my behavior. Congress is currently considering cuts to the Qualified Transportation Fringe Benefits program as part of the upcoming reconciliation bill and budget adjustments. This could have significant implications for employers and commuters who rely on pre-tax benefits to offset the cost of parking, transit passes, and vanpools.
Specialized Government-Owned Vehicle Exemption
In congested cities this is a great way to be green, provide a bit of employee camaraderie, and save the employees some money with no tax consequences. Employers can save an average of $40 per month on payroll taxes for each participating employee. Plus Edenred’s innovative, intuitive, and flexible commuting options can boost employee participation company-wide, which helps savings climb even more.
Enjoy the savings of commuter benefits
I then used to go in every month and reimburse myself from my transit bank account to pay off the credit card. There was also the option of directly paying for these using my transit debit card but then it does not fill up the cap nor do I get any points or cash back. Can I make commuter purchases if I retire, resign, or end my employment with the State? If you retire, resign, or end your employment with the State, you cannot make an order and no further purchases will be processed for you.