Commuter Benefits (Section 132)
Qualified parking and mass transit expenses may be paid for with pre-tax dollars through the TAG commuter benefit plan. This plan is a simple way for participants to reduce their commuting costs and for employers to gain additional payroll tax reductions.
What expenses qualify as “commuter benefits”?
Commuter highway vehicle: A commuter highway vehicle is any highway vehicle that seats at least 6 adults (not including the driver). In addition, you must reasonably expect that at least 80% of the vehicle mileage will be for transporting employees between their homes and work place with employees occupying at least one-half the vehicle’s seats (not including the driver’s).
Transit pass: A transit pass is any pass, token, fare-card, voucher, or similar item entitling a person to ride, free of charge or at a reduced rate, one of the following 1) On mass transit, or 2) In a vehicle that seats at least 6 adults (not including the driver) if a person in the business of transporting persons for pay or hire operates it. Mass transit may be publicly or privately operated and includes bus, rail, or ferry.
Qualified parking: Qualified parking is parking you provide to your employees on or near your business premises. It includes parking on or near the location from which your employees commute to work using mass transit, commuter highway vehicles, or carpools. It does not include parking at or near your employee’s home.
Additionally, commuter benefit plans allow participants to make contribution changes on a monthly basis. Employers have the choice of allowing participants to make monthly changes when necessary or choosing to have participants contributions fixed for an entire plan year.
Please contact a TAG representative for additional details about pre-taxing your parking or transit expenses.