As gas prices continue to concern commuters, many employers are finding Transit and Parking benefit plans are an easy way to subsidize their employee’s transit and parking costs. This cost-effective plan saves money for both you and your employees.
Under current rules, the Transit and Parking benefit plan is not considered income and is, therefore, tax-free to employees. It’s also excluded from wages for FICA purposes and is deducted as a normal business expense.
Work-related parking and transit expenses covered in the plan include:
- Vanpooling - transportation in a commuter highway vehicle for travel between the employee’s residence and workplace
- Transit passes - pass, token, fare card, voucher or similar item used to travel on a mass transit service to the workplace (i.e., subway, bus, train, etc.).
- Parking - work-related parking near the workplace or near the location where mass transit or vanpool is used
There are limits on the amounts commuters can use for each of these.
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