Description
Commuter tax benefits allow employees to use pretax dollars to pay for qualified commuting expenses, such as transit fares, vanpools, or park-and-ride costs. These measures reduce the employee’s costs of using non-SOV commute modes which can incentivize mode shifts to alternative modes of transportation.
Implementation Details
- Establish transportation benefit program compliant with Metropolitan Transportation Commission (MTC) commuter benefits program.
- Educate employees about eligible expenses and enrollment procedures.
- Promote sufficient alternative modes of transportation, such as transit, carpooling, or active transportation, near the place of employment.
Mitigation Potential
Reducing the cost of non-SOV forms increases the likelihood of commute trips shifting away from single occupancy travel. Reduction in VMT result from the decrease in personal vehicle usage.
For more details, see Victoria Transport Policy Institute – Financial Incentives for VMT reduction quantification.
Linked Strategies
Equity Considerations
Pretax reduction can disproportionately disadvantage low-income workers, who may benefit as much from tax savings. Ensure low-income employees see financial benefit from program. Accessibility of the benefit can disadvantage or even exclude part-time, temporary, or contract positions workers.
Funding Sources
Commuter tax benefits are largely self-funded or low cost to implement. Administrative startup costs may be supported through CMAQ (Congestion Mitigation and Air Quality) grants, state or regional TDM program funds, or TMA membership resources.
Implemented in TAM Area
Current TDM Implementation
Under the Bay Area Commuter Benefits Program, run by MTC and BAAQMD, employers with 50 or more employees must offer commuter benefits, and one option is a pre-tax commuting benefit. The County of Marin, City of San Rafael, and Dominican University of California are all employers that offer some commuter tax benefits. Marin Commutes includes pre-tax commuter choice programs in their resources for local employers to implement TDM strategies.
TDM Benefit Locations
Employers with less than 50 employees are not required to provide the same commuter benefits as larger employers, creating an opportunity to expand this TDM measure. Commuter tax benefits will have significant impact at parking-heavy or transit-accessible worksites.