Whether it’s to reduce traffic congestion, protect the environment or give commuters a benefit that impacts their daily lives, more and more municipalities (and government agencies) are passing transit ordinances.
Transit ordinances require employers to offer commuter benefits programs for their employees.
How does pre-tax commuter benefits work?
Typically, employees can take public transit, qualified parking and rideshares (Uber and Lyft), and apply their savings to the cost of their rides. This benefit gives the employees the opportunity to save money tax-free in their paychecks. Businesses win because it lowers the payroll tax.
Seattle is the latest city to the join the list. In 2018 the Seattle City Council approved legislation to require that companies in Seattle with 20 or more employees offer a Commuter Benefits program.
There could be many more on the way.
New Jersey could be the next for transit ordinance
If you live in New Jersey, your state could be next. The New Jersey Senate passed a bill in September 2018 that, if approved by the state Assembly and governor, would make The Garden State the first with a statewide transit ordinance in the country.
The Association for Commuter Transportation is working on getting 25 local governments to pass transit benefits ordinances by 2020.
Why are organizations nationwide offering commuter benefits?
- Employees save on commuting costs while employers save on payroll taxes.
- A great benefit that helps attract, retain and reward employees.
- Easy, hassle-free sign up leaves more time for other important tasks.
- Helps create a happier, less stressed and productive work environment.
“25 by 20 Transit Benefits Ordinance Campaign”
The “25 by 20 Transit Benefits Ordinance Campaign” is aiming to help reduce the cost of transit with pre-tax dollars and help more people get public transit passes.
Not only will families have more money, but the environmental impacts like improved air quality and reduced congestion will be beneficial to municipalities that pass the laws.
How much could you save with commuter benefits?
Though each program can vary, it generally sets up like this. IRS guidelines govern the programs. The employees’ tax-free dollars credited to a voucher, debit card or paid a transit or parking operator directly.
In 2019, the amount of money that can be saved every month was increased to $265. You can use a calculator here and see how much you can save.
If you live in New Jersey, for example, you can save $1,083 if you save $265 in your paycheck every month for commuting or qualified parking costs, and assuming you are married.
The savings will add up, but employers must offer commuter benefits to be enrolled.
To learn more about commuter benefits, download our 101 guide: