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Employer
Tax Incentives for Commuter Choice
Tax
Treatment of Employer Provided Commute Benefits
Federal
tax code provides tax incentives for Commuter Choice programs
that promote commute alternatives in the workplace such as:
- transit,
- carpooling
- vanpooling,
and
- parking
benefits.
The IRS
Code Section 132(f) gives employers and employees a variety
of ways to get tax savings in association with specified work
commute benefits.
- Under
current law, qualified parking benefits, transit benefits
and vanpool services are not subject to Federal taxes (up
to specified limits).
Employers
may also offer Parking Cash Out, where employees can trade
employer-paid parking spaces for cash or other qualified benefits.
If the employee elects the cash option, it is taxable for
that employee.
* Any
amount of benefit in excess of the Federal limits will be
subject to Federal income and payroll taxes. In addition,
States may apply taxes even when the Federal government
does not.
EXAMPLE:
Employer Tax Savings - when offering 100% Employer Paid Transportation
Benefit (MARTA) to employees
| Employer
Savings |
Private
Employer |
Non-profit/Federal
employee |
Gov't.
employee |
| Base
Cost |
|
|
|
Employer
FICA saved (7.65%) |
$190.79 |
$190.79 |
$190.79 |
| Less
40% Fed/State Tax Ded. |
$997.60 |
$0 |
$0 |
| True
cost MARTA (50 emp.) |
$1,305.61 |
$2,303.21 |
$2,303.21 |
| Employer
Tax Savings |
$1,188.39 |
$190.79 |
$190.79 |
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