How Much Do You Save On Transit
On average, employees save $700 each year, or more when they set aside up to $270.00 a month to pay for transit commuting expenses. Based on current legislation, your company can offer commuter benefits in the form of tax-free employer-paid subsidies, pre-tax employee-paid payroll deductions, or a combination of both.
Why Offer Commuter Benefits
Employee benefits can help improve employee morale and engagement, reducing employee turnover. When your employees feel appreciated and taken care of, theyre more likely to feel satisfied with your organization and less likely to look for a new job.
Transportation benefits also provide unique perks, such as:
- Reducing frustration during commutes: Avoiding traffic congestion with transit passes, parking hassles with parking perks, and other benefits
- Helping employees financially: Paying for part of or all of your workers transportation costs helps them to be able to afford gas, transit passes, or parking
- Reducing your environmental impact: By offering carpooling, transit passes, or other alternatives to driving, you can reduce your organizations carbon footprint, which can appeal to environmentally-conscious employees and consumers
The Perks Of Commuter Benefits
A successfully implemented commuter benefits program benefits both the employer and employee.
Employers can:
- Save up to 9% on federal payroll taxes
- Reduce parking demand and costs
- Recruit from a wider geographical area
- Enhance employee retention and satisfaction
- Win recognition through Champions, Best Workplaces for Commuters, Bicycle Friendly Business, and more
Employees can:
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Transit Deduction For Employers
In the past, businesses have been able to claim a federal income tax deduction on the amount they contributed to the commuter benefits program.
However, the Tax Cut and Jobs Act of 2017 eliminated the transit deduction for employers. You can no longer deduct commuter benefit contributions.
Although you cannot claim a transit deduction, you can still enjoy the payroll tax savings that come with offering commuter benefits.
You Do Not Need To Wait For Annual Enrollmentyou Can Sign Up Anytime To Make Your Commute More Convenient And Affordable
The JHU Commuting-to-Work program allows you to have pretax deductions taken from your pay to cover eligible expenses associated with your daily commute to work. You may elect a transit account , parking account , or both. The amounts are excluded from your taxable income up to the amount allowed by the IRS.
For tax year 2022, the pretax spending limit for mass transit increased from $270 per month to $280 per month. The limit for non-JHU parking also increased to $280 per month.
WEX, the university’s commuter benefits provider, offers a debit card to purchase transportation and non-JHU parking passes, or the ability to reimburse yourself via your online account or mobile app.
You do not need to wait for Annual Enrollmentyou can sign up anytime to make your commute more convenient and affordable.
Make your election from the Benefits & Worklife homepage by clicking on the myChoices Health & Life Enrollment tab select Life Events and then Commuter Benefits Program. The cost will automatically be deducted from your paycheck and applied to your WEX debit card.
For more information on the commuter assistance program, contact WEX at 866-451-3399 or visit its website.
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Iv Employees Covered/not Covered By The Law
Which employees are covered under the law?Who is considered a full-time employee?Does the law apply to employees working for a temporary help firm?Does the law apply to part-time employees?Are commuter benefits programs beneficial for all employees?nyc.gov/consumersnyc.gov/taxprepDoes the law apply to full-time employees whose employer is located outside of New York City but whose job responsibilities require them to work occasionally in New York City?
| Scenario:Dans Business is located in New Jersey, but it employs 25 full-time employees who work in New York City occasionally. Does Dans Business have to offer commuter benefits? Yes. Dans Business employs 25 full-time employees who work occasionally in New York City and, therefore, the business must offer these employees the opportunity to use pre-tax income to purchase qualified transportation fringe benefits. |
Does the law apply to employees who live outside New York City but commute to New York City to work full time?
| Scenario:Jackie lives in New Jersey and uses New Jersey Transit to commute to her job at ABC Foundation, a New York City nonprofit that employs more than 20 full-time employees. Jackie works 35 hours a week, and has worked full time at the foundation for two years. Is Jackie covered by NYCs Commuter Benefits Law? Yes. ABC Foundation must offer Jackie commuter benefits. |
Are independent contractors covered by the law?Does the law apply to former employees?
Key Dates In The Rollout Of The Law:
- Beginning January 1, for-profit and nonprofit employers with 20 or more full-time non-union employees in New York City must offer their full-time employees the opportunity to use pre-tax income to pay for their commute. Under federal tax law and effective January 1, 2020, employees can currently use up to $270 a month of their pre-tax income to pay for qualified transportation.
- The law gave employers a six-month grace periodfrom January 1, 2016 to July 1, 2016to begin offering a commuter benefits program. Employers were not subject to penalties for violations that took place before July 1, 2016. The law continues to provide employers 90 days to cure a violation before DCA is authorized to seek penalties.
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Iiemployers Covered/not Covered By The Law
Which employers are exempt under the law?
- Employers whose employees are covered by a collective bargaining agreement . Exception: If the employer has 20 or more full-time employees who are not covered by the CBA, the employer must offer these employees commuter benefits.
- United States, New York State, and New York City governments, including any office, department, independent agency, authority, institution, association, society, or other body of the state, including the legislature and the judiciary.
- Employers not required to pay federal, state, and City payroll taxes.
Does the law apply to chain businesses?Does the law apply to temporary help firms?Does an employer have to offer commuter benefits if its workforce is reduced to fewer than 20 full-time employees?
New 2022 Commuter Benefits Increase
The IRS announced that the monthly commuter benefit for both mass transit and parking increased by $10, for a maximum monthly contribution of $280 for plan years beginning on or after January 1, 2022.
Under Section 132 of the Internal Revenue Code employees are permitted to pay for commuter vehicle expenses, transit passes, and qualified parking expenses on a tax-favored basis.
Pre-tax commuter benefits are available in two separate spending accounts:
- Commuter Transit Spending Account Transportation cost associated with a commuter highway vehicle for travel between an employees residence and place of employment, and any transit pass can be pre-taxed.
- Parking Spending Account Qualified Parking Expense can be pre-taxed.
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How Do Commuter Benefits Work
- First off, commuter benefits allow employees to contribute to a transit or qualified parking fund out of their pre-tax That means that money they would be taxed on, and then have to put toward their commute, instead is only put toward their commute. This may not sound like a lot, but it adds up remember, employees go to work 5 days out of the week in most cases.
- If a company offers pre-tax transit benefits, youll talk to the HR department about setting up an account, as well as with accounting, to see how it might help your budget. Money from employees paychecks goes toward their commuter benefit fund.
- This fund can be used for a few different purposes:
- Contracting with a vanpool service for employees to use
- Loading up transit cards for public transit in your city or town
- Reimbursing commuters for their travel expenses
Commuter Benefits And Tax Savings
Because commuter benefits are pre-tax deductions, they can reduce the amount your employees pay in payroll and income taxes. When employees contribute to their commuter benefits plan, they owe less in federal income, Medicare, and Social Security taxes.
Offering commuter benefits provides tax savings for employers, too. Social Security and Medicare taxes are employer and employee taxes, meaning you and the employee need to contribute a matching 7.65% of the employees wages. When an employee owes less in Social Security and Medicare taxes, you owe less too.
Lets say an employee earns gross wages of $2,000 per month. Their FICA liability is $153 per month . And, your FICA liability is $153 per month for that employee.
Now lets say the employee contributes $200 a month to their commuter benefits plan. Because their taxable wages are now $1,800 , you and the employee will only owe $137.70 each.
This reduces your FICA tax liability for that employee by $183.60 per year [ X 12).
If you have more than one employee, your year-end FICA tax savings can add up.
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How To Offer Commuter Benefits
Go right to the experts: your employees, your fellow business owners, and your benefits provider. Ask your staffers if commuter benefits are something they want and if it would make sense to offer them over things like PTO, retirement, or health benefits until your bottom line can stretch a bit. Talking to them will give you a better sense of how essential this benefit feels and help you decide how much youre willing to spend per employee. You can do pre-tax withholding for free, but you may also want to match or pay outright for pieces of your offering.
Talk to other businesses in your building or center to see how theyre handling parking or commuter expenses specific to your area. For some companies, youll only have one parking option while others will have multiple garages or parking lot choices. Could all the tenants negotiate better pricing and lower costs from the start?
Talk to a tax pro or accountant about the best options if this is the right perk for your employees and to make sure you understand how to set everything up correctly if needed. If you choose to implement one or more of the pre-tax commuter benefits options, your payroll services provider can also make sure its automatically and correctly deducted from payroll and payroll taxes.
V Transit Covered/not Covered By The Law
What types of transportation costs are covered under the law?Appendix ACan employees use their commuter benefits to pay the cost of more than one mode of transit during their commute?
| Scenario:George commutes to his full-time job at a bank in New York City using Long Island Rail Road and the subway. Can George use commuter benefits to pay for his train and subway costs? Yes. George can use his commuter benefits to pay for his LIRR ticket and his MetroCard. However, effective January 1, 2020, the monthly cap on pre-tax commuter benefits is $270 per month, so George may not be able to cover all of his expenses with pre-tax income. |
Does the law cover vanpooling?Does the law cover dollar vans or other commercial commuter van services?Does the law cover carpooling when employees who commute together use a privately owned vehicle?Does the law cover ridesharing transportation platforms, such as Via, Lyft, and UberPOOL, that offer transportation in a shared vehicle with a seating capacity of at least six adults ? Does the law cover ferry services into and within New York City?May employees use commuter benefits to pay for Access-A-Ride?May employees use commuter benefits to pay for discounted MetroCards under the Fair Fares NYC program?May employees use commuter benefits to pay for a reduced-fare MetroCard?Are CitiBikes covered by the law?
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Increase In Monthly Pre
The federal government has increased monthly pre-tax commuter benefits that employees may take to pay for transportation from $270 to $280 for 2022. Otherwise known as the Qualified Transportation Fringe Benefit, employers must enable employees to take this benefit monthly. This program can increase health and wellness for your employees and make it easier and less expensive for them to take advantage of transportation alternatives.
The details:
- P14 of IRS Revenue Procedure 2021-45 raises the qualified transportation fringe benefit monthly limitation from $270 in 2021 to $280 in 2022.
- Rule .17 Qualified Transportation Fringe Benefit.
- For taxable years beginning in 2022, the monthly limitation under § 132 regarding the aggregate fringe benefit exclusion amount for transportation in a commuter highway vehicle and any transit pass is $280.
- The monthly limitation under § 132 regarding the fringe benefit exclusion amount for qualified parking is $280.
Please note for 2018 through 2025, the Tax Cuts and Jobs Act suspended the exclusion for qualified bicycle commuting reimbursements. Prior to TCJA, employers could reimburse employees up to $20 per month for eligible bicycle expenses. The budget reconciliation package still being considered by Congress would possibly restore and expand the bike benefit. If that package passes, the bike benefit will be back for 2022. Stay tuned!
More information and a summary table of 2021 rates is on the Best Workplaces for Commuters website.
How Does It Work
If your employerâs plan design includes the online ordering model, youâll enter your parking and transit orders online, and the cost of your orders will be automatically deducted from your paycheck on a pre-tax basis.
No annual enrollment is needed. Simply submit your orders online anytime during the plan year.
You can even set up recurring orders that automatically generate your transit order or pay your contracted parking vendor. If your commuting needs change, you can adjust or cancel your order.
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What You Need To Know About Commuter Benefits
If youre commuting back to the office in 2022, heres a refresher on commuter benefits.
What are commuter benefits?
Commuter benefits gives employees the opportunity to tax-free dollars on commuting costs and keep more of what they earn in their paycheck. Employees can decide how much they want to set aside each month, up to $280 a month. They get vouchers or debit cards to pay for the commuting costs, or the vendor is paid directly.
Where can you use commuter benefits?
Commuter benefits can be used to pay for:
- Parking, Meter, Garages, and Lots
How much can employees spend?
In 2022, employees can spend up to $280 tax-free per month for their commuter benefits.
What about employers?
Employers save about $40 per month for each person who participates in the commuter benefits program. Commuter benefits reduce their payroll tax bill for the company because employees spend tax-free money.
Here is a breakdown of the savings. If a company has 50 employees participating, the employer can save more than $24,000 annually.
How are commuter benefits legal?
Commuter benefits are considered a fringe benefit by the IRS.
Are commuter benefits mandated?
There is no national commuter benefits law. However, there are several state and local laws. Those laws include:
- San Francisco Airport
- S. Federal Government
- Bay Area Air Quality Management District
- San Francisco Bay Region
Are you interested in adding commuter benefits? Book a meeting with us so we can help you get started.
How Much Is A Commuter’s Benefit In 2019
Reimbursing commuters for their travel expenses. The IRS maintains that pre-tax commuter benefits in 2019 must be limited to $265 a month for transit and $265 a month for parking costs. Any funds added to a commuter account over and above the $265 a month transit and $265 a month parking limits must come out of post-tax income.
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How The Harrison Group Helps You With Section 132 Commuter Benefits Plans:
- Customer Service is our FOCUS It is critical to select a Section 132 Commuter Benefits administrator who not only answers the phone but also assists employees when they have questions. We offer considerable resources to provide both onsite and online education for your employees.
- A Partner with Proven Expertise With over 30 years of experience in the industry, our clients have come to rely on us to partner with them and their health insurance broker to provide the necessary education and benefits plan consultation.
- Concierge Customization One size does not fit all. We offer customized solutions to meet your specific objectives regardless of your size or demographics.
- Technological Advances We offer the latest in industry-leading technology to our clients including a web and mobile application for accurate claims submission. We also offer online education for employers and their employees.
If you have questions, please give us a call or contact us online. We will be happy to assist you.
Quick Answer: What Is The Bicycle Commuter Benefit
The Federal Bike Commuter Benefit is part of President Bidens Build Back Better Bill, the fate of which is yet unknown as of January 2022. The benefit would allow employers to offer employees up to $81 in pre-tax bike commuting benefits per month.
It was over a year ago, on January 3, 2021, that the Build Back Better Bill was introduced in the 117th Congress by US Representative Earl Blumenauer.
The Build Back Better Bill was passed by the US House of Representatives on November 19, 2021. But progress shuddered to a halt in December 2021 when Senator Joe Manchin withdrew his support for it due to concerns about the cost.
President Biden still hopes to pass parts of the $1.85 trillion bill into law by offering a pared-down version of it. This would salvage the climate-change measures that would seem to include the Federal Bike Commuter Benefit.
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