This year, there’s big news for employers who offer—and employees who receive—pre-tax commuter benefits. On December 18, 2015, President Obama signed into law a year-end transportation package that included a provision to increase commute benefits. The maximum pre-tax benefit allowance rose to $255 per month in 2016—a modest increase from $250 for parking but a substantial increase for transit, up from $130! Can you say cha-ching?
An estimated 2.7 million employees nationwide currently receive pre-tax commuter benefits, and that number is expected to jump in 2016 as major cities hop on the mandated commuter benefit program train.
As of January 1, 2016, employers located in New York City and Washington, D.C., with 20 employees or more, are required to offer a commuter benefit program. This mandate follows in the footsteps of San Francisco, which began its program in 2009 and expanded in 2014 to include Bay Area employers.
To comply, employers must offer at least one of the following transportation benefits, with requirements varying by city:
• Employee-paid pre-tax transit benefit: Employees use pre-tax funds for transit fares (NYC, DC, San Francisco, and Bay Area)
• Employer-paid direct benefit: Employers subsidize transit and vanpool fares for commuting (DC, San Francisco, and Bay Area)
• Employer-provided transit: Provide complimentary shuttle or vanpool services to employees (DC, San Francisco, and Bay Area)
• Combination of options above or equally effective employer provided benefit (San Francisco and Bay Area)
Robust commuter benefit programs impact employees’ daily travel decisions by making alternative transportation options, such as public transit, carpool, vanpool, bicycling, easy and affordable. With the money employees save on commuting costs, employees see an increase in disposable income.
Utilizing alternative commute modes is physically and mentally healthy. Individuals who commute via alternative modes are typically more active and less stressed than those who travel in single-occupancy vehicles.
According to a study by the TransitCenter, a non-profit mass transit advocacy group, employers who have implemented commuter programs have experienced an increase in employee job satisfaction, employee retention, and recruiting success.
The pre-tax commuter benefit saves the employer money because they don’t have to outlay payroll taxes of 7.65% on every dollar set aside by employees pre-tax. With decreases in payroll taxes, employers may see up to 9% savings for each employee participating in the program.
Mother Earth Benefits
Mandated commuter benefit programs encourage employees to ditch their car and take transit, bike, walk, or join a car/van pool to get to work, helping to reduce rush hour demands on congested roadways and harmful emissions.
Approximately 90,000 commuters participated in San Francisco’s commuter benefits program in 2013. The program resulted in a reduction of CO2 emissions by an estimated 290,000 metric tons, with an average of 123,538 gallons of gas saved, and a daily average vehicle miles traveled (VMT) reduction of 2,903,136 miles. You can find out your company’s reduced VMT the free calculator offered by Commuter Connections, a regional network of transportation organizations coordinated by the Metropolitan Washington Council of Governments.
At ASC, however we go, we like to go green and save green. With more than half of our staff utilizing alternative commute modes, we know first-hand how beneficial it can be. How do you travel to and from the office?Be the first to comment