Overview: Many employers provide commuter benefits to soften the blow of the high cost of commuting and to help recruit and/or retain valuable employees. This voluntary employee benefit program allows employees to reduce their monthly commuting expenses related to parking, transit, vanpooling and bicycling. Money used for eligible commuting expenses is excluded from gross income and, in many states, can also be excluded from state and local taxes.
Tax-free commuter benefits can be funded by:
In addition to helping with recruitment and retention, some employers provide transportation benefits for environmental and societal reasons. Driving to and from work on a regular basis takes a toll on the environment, traffic congestion and air quality. Offering commuter benefits may encourage workers to commute by mass transportation which, in turn, may reduce the number of commuters in cars, alleviate traffic jams, smog and damage to the environment.
Author: Tracy Morley, SPHR, Legal Editor
The IRS has released Revenue Procedure 2016-55, which provides the annual inflation adjustments to the employer-provided fringe benefit limitations and personal income tax-related amounts.
Certain District of Columbia employers are required to offer employees tax- or cost-free commuter benefits. Certain employers in New Jersey and Connecticut must comply with the New York City commuter benefits law if they have employees working in New York City.
In-depth review of the spectrum of District of Columbia employment law requirements HR must follow with respect to taxation of employee compensation.
In-depth review of the spectrum of New Jersey employment law requirements HR must follow with respect to taxation of employee compensation.
In-depth review of the spectrum of Connecticut employment law requirements HR must follow with respect to taxation of employee compensation.
Enhanced by the addition of a new law in New York City requiring employers to offer commuter benefits to full-time employees, enforced as of July 1, 2016.
To help employers comply with the laws on fringe benefits in Hawaii, XpertHR has added a new Taxation of Employee Compensation: Hawaii section to the Employment Law Manual.
In-depth review of the spectrum of Hawaii employment law requirements HR must follow with respect to taxation of employee compensation.
HR guidance on the benefits of providing commuter/transportation benefits.