Transportation benefits give your organization an edge in today's tough competitive environment.
Offering transportation benefits to your employees is an effective way to recruit and retain top talent-a critical strategy
in today's difficult business environment-and gives you a tax break, too.
The 1998 amendment to the Transportation Equity Act for the 21st
Century (TEA-21) created financial incentives related to commuter
benefits for employers and employees.
Here's how it works. You can pick one incentive or employ a combination, up to a limit of $260 per employee per month.
- Employer-paid transportation benefits. Employers can pay for each
employee to commute via mass transit (bus, carpool or vanpool).
Employees do not pay taxes on the value of this benefit and employers
get a tax deduction for the expense. This offers significant savings
over providing the equivalent dollar value to employees in the form of
a salary increase.
- Pre-tax transportation benefits. Employers can allow employees to
elect to exchange taxable salary for a tax-free bus, carpool or
vanpool benefit. Employers save money overall since the amount
exchanged is not subject to payroll taxes. Employees save money
because this reduces the amount of taxable income.
- Shared-cost transportation benefits. Employers can share the cost
of bus, carpool or vanpool costs with employees and everyone can
receive valuable tax savings. Employers can provide a portion of the
cost of taking transit or vanpooling as a tax-free benefit and allow
the employee to exchange taxable salary for a tax-free bus, carpool or
- Parking cash-out. Employers can offer employees the option to
"cash out" of their existing parking space. In other words, the
company can offer the employee what it would pay for the parking space
in the form of taxable salary or tax-free transportation benefits.
Be sure to contact an attorney or accountant for specific tax guidance.
If you need further information about METRO STAR, direct your email to STAR@ridemetro.org.