‘Tis the Season for Commuter Benefit Tax Savings
One of the easiest and most overlooked ways employers can help employees save money is through pre-tax commuter benefits. These programs allow employees to set aside pre-tax dollars to pay for eligible commute costs such as transit passes or vanpooling, saving hundreds per year. The best part is: employers can save money too.
What are pre-tax commuter benefits?
The federal tax code allows employees to use tax-free dollars to pay for commuting and parking costs through employer-sponsored programs. In 2026, the tax code allows tax-free transportation fringe benefits of up to $340 per month per employee – an increase from the $325/month limit in 2025. These tax savings can apply to:
Public transit (bus, MAX, WES, streetcar, C-TRAN, etc.)
Vanpool fares
Qualified commuter parking (parking at or near an employer’s worksite, or at a facility from which an employee commutes using transit, vanpool or carpool)
Why it matters for employers
Lower payroll taxes: With lower employee taxable income, employers pay less in payroll taxes. Employers can save roughly 7.5% in payroll taxes on the amount employees set aside.
Low cost, high impact benefit: Pre-tax commuter benefits cost very little to administer, but are considered a valuable perk by employees.
Supports recruitment and retention: Offering sustainable and affordable commute options will help your organization stand out in a competitive job market.
Most payroll providers and benefit administrators can help you set up a pre-tax commuter benefit in just a few steps. Use Get There Oregon’s Commute Solutions Toolkiit to find communication resources to let your employees know about this new benefit and encourage commuting by transit.
To discover other ways to improve your employees’ commutes and enhance your benefits package, check out our Commute Benefit Program Guide or schedule a free consultation.