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Commuter Benefits
Commuter Benefit Plans allow employers to offer a tax break to employees with qualified transportation expenses related to their employment. This benefit reimburses employees based on the amount deducted from their paycheck and is capped at a monthly amount. The monthly amount is determined by the IRS & typically changes year to year.
The following benefits may be offered on a pre-tax basis through a commuter plan:
Transit Passes
These include any pass, token, fare card, voucher, or similar item entitling a person to transportation (or transportation at a reduced price) if it encompasses mass transit facilities or is provided in a highway vehicle eligible for use in vanpooling.
Vanpooling
This means transportation to and from an employee‘s residence, but only if the transportation is in a “commuter highway vehicle” that seats at least six adults plus the driver. At least 80% of the vehicle‘s use should be for transporting employees between their homes and their jobs. Employees must use at least half of the seating capacity for such trips.
Qualified Parking
The Qualified Parking benefit enables the employee to pay for parking with pre-tax dollars if the parking facility is at or near the employer’s business premises. It also includes parking at or near a location from which the employee commutes to work by mass transit, vanpooling, in a commuter highway vehicle, or by carpool (parking at or near the employee’s home does not qualify).
