Commuter Choice refers to provisions in the Internal Revenue Code [(26 USC 132(f)] that permit employers to offer tax-free benefits to employees who commute to work by methods other than driving alone.
This benefit can be realized by an employer providing the following Metro Ride fare options to its employees:
- Adult Bus Pass ($36/month) - good for unlimited rides during the calendar month.
- Senior/Disabled Bus Pass ($18/month) - good for unlimited rides during the calendar month.
- Bus Tokens (10 for $9.00) - good for 10 one-way rides.
Benefit Methods
Employer-Paid Benefits - Employers can pay for their employees up to $230/month* to commute by transit. With this arrangement, employees receive up to $230 monthly in a tax-free transportation benefit. Employers get a tax deduction for the expense. Employers have found that providing transportation benefits offers significant savings over offering the equivalent dollar value to employees in the form of a salary increase.
Employee-Paid Benefits - Employers can allow employees to elect to exchange up to $230/month* in taxable salary for a tax-free transit benefit. Employers save money overall since the amount exchanged is not subject to payroll taxes. Employees save money, too, since the amount of an employee’s salary exchanged for transportation benefits is not subject to income tax, up to the specified monthly limits.
Shared-Cost benefits - Employers can provide a portion of the cost of taking transit as a tax-free transit benefit.
* Keep in mind that the cost of Metro Ride fare media is well below the $230 IRS monthly benefit limit.
To Obtain Additional Information
- The pertinent law of the Internal Revenue Service (ww.irs.ustreas.gov) can be found in Section 132 in the Internal Revenue Code, Tile 26 of the U.S. Code, as modified by the American Recovery and Reinvestment Act of 2009.
- Visit the American public Transportation Association's (APTA) website at www.apta.com and click on "Government Affairs" and then Transit Commute Benefit."
- Click here to view the APTA Commuter Choice brochure.
- The Federal Transit Administration (FTA) provides extensive materials on its web site at www.fta.dot.gov, by searching "Commuter Choice."
- For more information on obtaining Metro Ride passes and tokens, e-mail Metro Ride at metroride@ci.wausau.wi.us.