Commuting can be a significant aspect of your employees’ workday and providing them with valuable benefits can improve job satisfaction, reduce stress, and contribute to a more sustainable future.
Why Commuter Benefits?
Employee commuter benefits offer numerous advantages for both employers and employees:
- Employee Recruitment and Retention: Offering commuter benefits can make your company more attractive to potential employees and help retain existing talent.
- Tax Savings: Employers and employees can enjoy potential tax savings through various commuter benefit programs.
- Cost Savings: Supporting sustainable commuting options reduces your company’s expenses for parking and lowers commuting costs for your employees.
- Reduced Stress: Providing options for stress-free commutes can improve employee well-being and productivity.
Transit and Vanpool Incentives
Employers may provide a monthly commuter benefit to employees who commute to work using transit (bus or rail) or vanpool. The commuter benefit can be provided as a pre-tax or direct benefit. For 2023, the IRS allows a tax-free amount up to $300 per month.
Pre-Tax Commuter Benefits
This option allows employees to set aside money for their transit or vanpool expense each month from their paycheck (like a pre-tax flexible spending arrangement for healthcare expenses).
Direct Commuter Benefit
Employers may provide a commute benefit directly to employees in their paycheck for monthly transit or vanpool expenses. This type of benefit is not taxable income for the employee and the employer does not pay payroll taxes on the benefit amount, up to the maximum allowed by the IRS.
More information on IRS rules can be found in Publication 15-B (2023), Employer’s Tax Guide to Fringe Benefits – https://www.irs.gov/publications/p15b
Contact us if you are considering establishing a pre-tax or direct commuter benefit for your employees.
Vanpools are the perfect commute for employees of five to 15 riders who travel 15+ one-way miles to work using similar routes as their coworkers and qualify for the pre-tax fringe benefits.
As the employer you have a few options – buy, lease or contract. If you are a large employer, you may benefit from purchasing your own vans which would allow you to have control and customization of your vehicles and fleet. This option can be more capital-intensive as you will need to purchase, register, insure and maintain the vanpools.
Leasing vanpool vehicles can cut down on an initial expense while allowing you as the employer the freedom of not having to purchase more vehicles as awareness of the program can increase the need for vans.
Contracting with vanpool provider can take away any commute stress from your employees, but you as an employer. Vanpool providers work closely with your team to help form potential vanpools, recruit drivers and riders by connecting employees who live near each other. Contracts with vanpool providers includes registration, insurance, and on-going maintenance of the vans.
Parking Cash-Out is a program in which the employer offers employees the option to accept taxable cash income instead of a free or subsidized parking space at work. This gives the employee the choice to keep the parking space at work, use the money to pay for transit or vanpool fares, or save the money by carpooling, bicycling, or walking to work. (Note: The employer can provide a tax-free transit or vanpool benefit as part of a Parking Cash-Out program.) By equalizing the incentives, some employees who currently drive alone may think twice about it and choose another option.
Provide Transit and Commute Options Information to Employees
Even if you can’t set up a commute benefits program, providing commute options information to your employees can be very helpful.
- New Employee Welcome Packets – Providing new employees with a packet that offers commute options on their first day or prior to their first day via email may assist them with options they had not thought about. This packet could include a free week bus pass and route information to your facility, bicycle maps, etc.
- Provide commute options information (e.g., carpool/vanpool matching, transit routes and schedules) via a company employee intranet website or postings in employee break areas. Encourage employees to use the ConnectingVA website or mobile app for ride matching, trip planning, and to earn rewards. (https://connectingva.agilemile.com/)
- Encourage employees to use transit, carpool, vanpool or bicycle. Make it fun by offer a friendly challenge between departments, explore a downtown circulator to different restaurants, etc.
Flexible Schedules and Compressed Work Weeks
Allow employees the opportunity to shift their hours to better align with transit schedules, accommodate carpools/vanpool hours, or family schedules. Also, a compressed work week such a four – 10 hour days/week or working 9 days in two weeks. For free assistance with your company’s hybrid work plans, visit https://connectingva.drpt.virginia.gov/hybrid-work-plans/
Offer carpools and/or vanpools preferential parking close to the main door to encourage and reward carpooling and vanpooling.
Bicycle Commuting Assistance
Provide safe and secure covered or indoor bike racks or lockers near the main entrance of your facility. Shower facilities add an important amenity for employees that bicycle to the office.
Contact us – Link to https://connectingva.drpt.virginia.gov/contact-us/
Download the full Commuter Benefits Guide for more information.
Interested in implementing a commuter benefits program for your business?