How much do employers and employees save?
For transit and vanpools, up to $230 a month ($2,760 a year) can be designated as a pre-tax payroll deduction. Employees can save more than $500 in annual commuting costs, while employers save up to $211 in payroll tax, per employee annually. For parking expenses, up to $230 a month (or $2,760 a year) can be designated as a pre-tax payroll deduction, resulting in almost $1,000 in tax savings for the employee and close to $200 per year per employee for the company. These examples assume a 33% combined federal and state income tax rate; Social Security (FICA) taxes paid by both employers and employees (7.65% of salary); as well as unemployment, disability, workman’s compensation and retirement costs driven by salary. Payroll tax savings are available to all employers, including non-profit and public sector employers that do not pay income or FICA taxes. Also, ‘for-profit’ companies providing transportation benefits to supplement employee salaries can deduct the entire cost of the program
Employees and employers save all income and payroll taxes on the amount of money provided for qualified transportation fringe benefits for commuting. In the case of the bike provision up to $20 per month ($240 per year) can be provided tax-free for bike commuting. Due to the tax savings, employees can save in annual commuting costs, while employers save on Federal and State income taxes; Social Security (FICA) taxes paid by both employers and employees, and unemployment, disability, workman’s compensation and retirement costs driven by salary.
