As of 2007, employers may offer expanded tax-favored benefits to their employees.  Section 132(f) of the federal tax code enables employers to ease employee’s commuting costs in several ways.

• Employer-financed – Employers may underwrite their employees’ transit or vanpool commuting costs, up to $110 per employee, per month.

• Employer perspective – Costs are a deductible business expense.
• Employee perspective – Transit, vanpool or parking benefits are free of all payroll and income taxes.

• Employee-financed – Employers may allow employees to set aside pre-tax dollars to purchase transit passes, and to pay vanpool fares.  Monthly limits are $110 per employee, per month for transit or vanpools expenses.

• Employer perspective – Employers save payroll taxes on the funds their employees set aside pre-tax, typically 7.65%.
• Employee perspective – Employees save payroll and federal income taxes on the set-aside funds.  For employees in the 25% tax bracket, for example, that savings represents over three month’s worth of commuting costs.

• Combined – Employers may choose to underwrite a portion of employees’ transit or vanpool costs and permit employees to set aside pre-tax funds for remaining costs, up to the monthly limits.

• Employer perspective – The portion of costs used to underwrite commuting costs are a deductible business expense.  Employers save payroll taxes (7.65%) on the portion their employees set-aside on a pre-tax basis.
• Employee perspective – The employer-financed portion of transit or vanpool costs are tax-free.  Employees save payroll and income taxes on the portion set-aside on a pre-tax basis.

Call 788-RIDE, ext 4 or email sean@mountainrides.org for more information