The Association for Commuter Transportation has launched a “25 by 20 Transit Benefits Ordinance Campaign” to encourage 25 local governments to pass transit benefit ordinances by the end of 2020.
We believe that transit benefits are significant driver for increasing the number of individuals utilizing public transit to get to work, as it reduces the cost of transit through the use of pre-tax dollars and puts transit passes in the hands of more people. The impacts will benefit us all through improved air quality, reduced congestion, and more money in the pockets of families.
Section 132(f) of the United States Internal Revenue Code provides a way for employers to provide parking, transit, vanpool, and bicycle expenses on a tax-free basis. In 2015, Congress passed legislation to establish parity between the parking benefit and the transit/vanpool benefit. The monthly cap for the parking, transit, and vanpool benefits are now at $255/month and both are subject to annual cost of living increases. The bicycle benefit remains at $20/month.
The transit benefit is a highly effective and easy tool for employers to provide options to their employees. The transit benefit helps reduce congestion, increase transit ridership, and improve air quality.
The transit benefits can be offered one of three ways:
*Note the Bicycle benefit can only be provided as a subsidy and cannot be combined with any other transportation fringe benefit
Currently, three major cities (San Francisco, New York City, Washington, DC) have passed ordinances that require employers who employ a certain number of people (ranging between 25-50) to provide their employees with the transit benefit (either pre-tax or as a subsidy). The ordinances have been passed without opposition and in several instances with the support of the business community, which is generally opposed to mandates. Additional information on existing ordinance can be found here.
If your city or municipality is considering enacting a transit benefit ordinance, now is a great time to do so.
Transit benefits are a proven way to increase the use of transit by employees by cutting the cost of taking transit by up to 40%. Employers have also embraced them because of both payroll tax savings and the goodwill it provides to employees at no cost, unlike most other employee benefits. Some may say that ordinances are unnecessary and not very business-friendly. But as you will see by exploring this site, business groups such as merchant associations and chambers of commerce, have come out in support of the concept once they understand the details.
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