What are pre-tax transit benefits?
The IRS tax code 132(f) allows companies to offer up to $340/month of tax-free commuter funds to each employee, either as an employer-paid subsidy or a pre-tax deduction from employees’ paychecks. This money can be used to cover the costs of commuting on public transit (including light rail, buses, trains, ferries, and vanpools) and qualified parking expenses (including at park and rides), or both!
Employees can save up to 30% on their commuting cost using pre-tax transit benefits. Employers also benefit by saving up to 8% per participating employee through reduced payroll taxes, making pre-tax benefits a win-win!
How can my business utilize this limit increase?
Businesses can provide these benefits through a third-party vendor, but the easiest — and most popular! — way for Seattle businesses to take advantage of commuter benefits is through one of the two ORCA Business Programs:
The most transit at the best price! Passport is an annual bulk-pass program. Fully cover your employees’ annual ORCA pass for one low, tax-free cost, or choose to split the cost with employees using pre-tax payroll deductions.
ORCA Choice is a flexible month-to-month option at retail rates. Load employees’ pre-tax deductions onto their cards, fund the card with a tax-free employer-provided subsidy, or do a combination of both! There’s no cost to businesses to set up an ORCA Business Choice account, making this an excellent option for managing pre-tax transit benefits in-house and maximizing potential savings.
Commute Seattle is here to help you find the right program for you! Schedule a call with our ORCA outreach team to learn how you can maximize savings for your business and employees.
What about the City of Seattle’s Commuter Benefit Ordinance?
The City of Seattle’s Commuter Benefit Ordinance (CBO) leverages the federal transportation fringe benefit. The Ordinance requires Seattle businesses with 20 or more employees worldwide to offer their employees the opportunity to pay for their transit commute expenses using pre-tax income. If an employee opts-in to a pre-tax benefit, the business must have a way to facilitate that benefit. Businesses can also comply by providing a subsidized transit pass.
Is your business affected by Seattle’s Commuter Benefits Ordinance? We can help! Schedule a call with our team to learn more.