Federal tax laws allow employees to save taxes on parking at work and transit or vanpooling expenses incurred to get to work. Employees can save by setting up a pre-tax payroll deduction that reduces taxable income. Qualified expenses are exempt from federal income and FICA (Social Security and Medicare) taxes. Your tax savings will vary, depending on your deduction amount and your tax bracket. The Commuter Benefit Program is a qualified transportation benefit program authorized by Internal Revenue Code (IRC) Section 132.
Eligible Commutation Expenses
Eligible commutation expenses include the following:
• Parking at or near work.
• Parking at or near public transportation to get to work.
• Train; and
• Vanpool (seating capacity of six or more adults, excluding driver, where 80 percent or more of miles for which vehicle is used is for transporting employees back and forth between work and home during which trip the vehicle is at least 50 percent full).
Limits on Monthly Pre-tax Deductions and Expenses
The following limits are in effect for the 2019 calendar year:
• Parking deduction is limited to $265 per month.
• Transit passes and vanpooling, whether separate or combined, the deduction is limited to $265 per month.
• Any monthly costs above these limits cannot be exempt from taxes and cannot be carried over to future months. Annual limits are set by the Internal Revenue Service.
How to Enroll
You can enroll by visiting the WageWorks website at: wageworks.com. New users can register by clicking on the “Register with WageWorks Now” link. You can enroll, change or terminate your pre-tax deductions at any time on a prospective basis.