Commuting Can Be Less Taxing
With April 15 on the horizon, Caltrain and SamTrans are pointing to the tax savings that are available to employees and employers who take advantage of federal pre-tax commuter benefits.
What’s more, a Peninsula agency is offering financial and other aid to San Mateo County employers interested in setting up a commuter benefits program.
Employees do not pay federal income or payroll taxes on commuter transit benefits, except on the amount, if any, in excess of $230 per month. This more than covers the cost of any SamTrans Monthly Pass ($165 being the most expensive) as well as the most popular Caltrain Monthly passes ($112.75 and $159).
“Transit commuter benefit programs can help reduce transportation costs for commuters, whether it’s for train or bus fares or for parking,” said Patrick Boland, Marketing Manager for Caltrain and SamTrans. “But the programs also provide cost savings to employers, which is especially valuable in tough economic times.”
Federal legislation signed by President Obama in 2009 nearly doubled the allowable pre-tax commuter benefit amount from $120 to $230 per month. Up to $230 is allowed for parking expenses, as well. The hitch is that employers must participate.
A new program sponsored by the Peninsula Traffic Congestion Relief Alliance provides fresh incentive for San Mateo County employers to get started – cash awards of up to $1,000 to defray some of the initial costs.
“The Commuter Tax Benefit is a real win-win for employers and employees, alike,” said Christine Maley-Grubl, executive director of the Alliance. “But setting up a program does entail some cost, which may deter some employers. By sponsoring its Commuter Benefit Employer Incentive Program, the Alliance hopes to make it easier for companies that would like to offer this great benefit.”
The benefit provided under the American Recovery and Reinvestment Act used to pay for transit passes works one of three ways:
- Employers give their workers up to $230 for transit as a tax-free benefit.
- Employers give employees the option to use payroll deductions to avoid paying taxes on up to $230 a month in commuting costs.
- Employers and employees share the costs of the benefits.
The Alliance’s Commuter Benefit Employer Incentive Program offers cash awards from $75 to $1,000, depending on the size of the company and the level of transit or vanpool participation in pre-tax commuter benefit programs.
For information, call 650-588-8170 or e-mail firstname.lastname@example.org. Alliance staff also will provide free consultation to companies which are considering starting a program.
Additional information can be obtained from the American Public Transportation Association at www.apta.com by clicking on “Government Affairs” and then “Transit Commute Benefit.” Companies also should consult their own tax professionals.