As of February 2009, the Federal tax code allows employers and employees to set aside pre-tax income to pay for transit commuting and parking costs. The tax code allows tax-free transportation fringe benefits of up to $230 per month per employee for transit expenses and up to $230 per month for qualified parking (includes BART stations). Qualified parking must be near an employer's worksite or at a facility from which an employee commutes. Commuters can receive both the transit and parking benefits - up to $460 per month.
If a transit rider has a combined tax rate of 40% and spends $190 per month on BART, they will save $76 a month and $912 a year. Employers are allowed to count the transportation subsidy as a fringe benefit and not wage or salary compensation; they save roughly 9% in payroll taxes. In other words, giving an employee $120 worth of transit benefits is cheaper than raising a salary by $120.
Benefit management companies like ADP, Ceridian, SHPS, Fringe Benefit Management and WageWorks can assist many employers with the implementation of a Commuter Tax Benefits program. The Peninsula Traffic Congestion Relief Alliance can also provide commuter assistance.
Take Action:- Employees can calculate savings at www.accorservicesusa.com/Calcs
- Employers can calculate savings at www.accorservicesusa.com
- Visit WageWorks.com for administrative help setting up a benefit program.
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