Contra Costa Air Quality

Commuter Tax Benefits for 2018 – Information for Employers

There are many ways to implement or improve an existing commuter benefit program at little or no cost. Offering certain employee benefits can actually save your company money. If your office is located in any of the nine San Francisco Bay Area counties and you have 50 or more employees (at a single site or at multiple sites) you are required to register with the Bay Area Commuter Benefits Program.

Corporate Tax Benefit Information

Under the Transportation Equity Act, IRS code 132(f), and California state law, employers are allowed to offer payroll tax savings for transportation assistance. Employers also have the option of subsidizing part of their employees’ commuting costs and allowing employees to pay for the remainder with pre-tax dollars.

The IRS has deemed the following monthly amounts allowable for 2018 under tax code IRS 132a:

 Transit or vanpool = $260 Bicycle Subsidy = $20
Qualified Commuter Parking = $260 Combined Parking & Transit Benefit = $260

Commuter benefits are considered tax-free benefits, not employee wages, so your company can save on average 7.65% in payroll taxes. Employees who participate in your commuter benefit program don’t have to pay income taxes on the money they set aside for their commute, saving up to 40% on their commuting expenses.

Page last updated Jan 12, 2018