If you hadn't heard, the IRS increased the pre-tax commuter benefit limit to $340 per month at the beginning of 2026. With this increase in mind, ATP hosted a webinar discussing commuter benefit programs - if you were unable to attend or simply want to refresh your memory, read more to learn what was discussed.
Commuter benefits are employer-sponsored programs that allow employees to save money on eligible work-related transit and parking costs. There are three different options that an employer can choose from when setting a commuter benefit program.
Pre-Tax Benefit: In this benefit option, employees can allocate pre-tax income towards their transportation and parking costs. This option can be offered at no cost to the employer as the funds come directly from employee salaries.
Direct Benefit: An employer may choose to cover the full or partial cost of their employee’s commutes through a subsidy. This is considered the highest commuter benefit an employer can offer and is most appropriate for organizations with employees who have consistent, daily transportation costs.
Combination Benefit: The employer provides a subsidy towards commuting costs. The employee may also allocate pre-tax income towards their commute for any expense not covered by the subsidy. This benefit is a combination of a direct benefit and a pre-tax benefit.
Commuter benefits can be used on a variety of commuting alternatives to driving alone:
Rail: This includes Metrorail, Virginia Railway Express (VRE), and the Maryland Area Regional Commuter (MARC) train.
Bus: This includes local bus transit systems such as Arlington Transit (ART) and Metrobus, in addition to commuter buses such as OmniRide and Fairfax Connector.
Vanpool: Commuter benefits can cover a wide variety of costs associated with vanpooling including monthly fees to lease the van as well as operating costs like fuel. For the commuter benefit program to apply, this must be an official vanpool hosted through a vanpool provider.
Work-Related Parking: Commuter benefits can be used on parking at your worksite if applicable or any parking associated with your daily commute such as at a transit station or commuter bus lot.
A pre-tax commuter benefit is unable to be used on active commuting options such as walking, biking, and micromobility solutions. An employer who is interested in offering a benefit for these commute modes may consider offering their own financial incentive for active commutes.
Alternatively, organizations can offer a Capital Bikeshare Corporate Membership to support bike commuters. You can view the system map to determine if your office is located near a Capital Bikeshare station.
With Bike to Work Day coming up on May 15, now is the perfect time to consider a benefit for bikers.
In the case of a pre-tax commuter benefit, employers can expect to save money by allowing employees to allocate their pre-tax income for their commuting costs which in turn reduces the total taxable payroll. Employers can expect to pay less in FICA taxes on every dollar that employees contribute, up to the monthly IRS limit of $340 per month.
Offering a commuter benefit program helps to round out your total benefits package which can help to attract and retain employees. By lowering transportation costs and reducing commute-related stress, commuter benefits boost employee retention that could otherwise be risked by consistently expensive travel. Employers can supplement their commuting benefits with a flexible or hybrid workplace which allows employees to avoid peak commuting hours.
Commuter benefits directly improve sustainability by reducing single-occupancy vehicle use, which cuts emissions and improves air quality. Commuter benefit programs can help organizations reduce their carbon footprints and align with environmental, social, and governance (ESG) goals.
Incentivizing employees to use public transit or form a vanpool can lower the total amount of parking that your organization may need to offer. There are many reasons to commute without a car, but many people may not try out these modes without financial motivation to nudge them towards car-free alternatives.
During the webinar, we were joined by Al Watson, a benefits administrator who has been with WMATA for over 23 years, to explain how employers can begin implementing a commuter benefit program at no cost through the SmartBenefits program.
SmartBenefits can be utilized for any type of commuter benefit, whether it is pre-tax, direct, or combination. The program allows users to pay with their commuter benefit funds by swiping their registered SmarTrip card, which can be used to ride Metrorail, Metrobus, and the various bus operators across the Washington metropolitan area. SmartBenefits can also be used for regional rail such as VRE and MARC, by allowing you to purchase tickets with commuter benefit funds.
To get started, your organization will have to determine a staff member to manage a single SmartBenefits account for your employees as a benefits coordinator. Your benefits coordinator will be able to manage the benefit amount for each employee, determine what to do with unused funds, and make any additional adjustments on a month-to-month basis.
Watch the full webinar below for additional information and resources that will help you get started with SmartBenefits.
ATP can walk you through a step-by-step process to develop and implement your commuter benefit program. Your ATP rep will assess the transportation needs at your worksite and assist with the development and rollout.
ATP offers a wide variety of resources that can assist your organization with developing or expanding your commuter benefit program. Consider downloading our Commuter Benefits Guide for further information and a detailed breakdown of how you can expect to save money on payroll taxes.
The Commute Toolkit will improve your knowledge of the sustainable transportation resources and systems that are available to employers within Arlington County. The toolkit can inform your employees on how they can make the most out of their commuter benefits. Your employees can also take advantage of ATP’s complimentary commute planning service to identify commute alternatives. Upon completing the form, an ATP rep will create a customized plan detailing multiple ways an employee can commute showing specific examples of how they can begin to implement commuter benefits.
Stay connected with ATP to ensure you have the most up-to-date information when it comes to commuting in Arlington. Whether it is through our blog posts, newsletters, or webinars, ATP will help you stay informed.
Watch the full webinar below and hear directly from our featured presenter.
Photo Credit: Sam Kittner/Kittner.com for Arlington Transportation Partners