With more and more companies moving away from remote work schedules, commuter benefits are likely to increase in popularity. Through employers, commuter benefits allow employees to use tax-free dollars on commuting expenses, saving employees money on annual taxes. Qualified expenses may include:
- Parking costs – parking on or near the business premises. It could also include parking on or near the location from which employees commute using mass transit, commuter highway vehicles, or carpools. Parking near or at an employee’s residence is not covered.
- Vanpooling – transportation between the place of employment and the employee’s residence. Transportation must occur in a commuter highway vehicle, seating at least seven adults (including the driver).
- Transit passes – passes, tokens, farecards, vouchers, or related items that permit employees to ride at a reduced rate or free of charge on mass transit vehicles. Similar to vanpooling, the vehicles must seat at least seven adults including the driver.
The current 2023 maximum contribution limit is $300 per month for qualified parking and $300 per month for combined transit passes and vanpooling. Election changes are not limited to the plan year. The amount an employee contributes to their commuter benefits account can be updated and adjusted each month or even terminated altogether. Funding will remain in the account until it is exhausted.
Why employers offer commuter benefits
Approximately 58% of respondents in a Newsweek poll reported a need for employers to cover commuting costs. Offering commuter benefits is a way to improve morale and create a culture where employees feel valued. These benefits can help reduce traffic during commutes, provide employees with a financial boost, and reduce the company’s carbon footprint.
If you have questions regarding your commuter benefits, please contact your dedicated Creative Benefits, Inc. team member.