Commuter Benefits

Commuter benefits are authorized under Section 132(f) of the Internal Revenue Code.

Currently, employers can provide a transit fare subsidy or allow employees to direct earnings towards transit expenses as pre-tax payroll deduction. The pre-tax option was authorized in 1998 and has proven to be extremely popular.

To take advantage of tax-free transit "fringe benefits," as they are called, and employer can purchase transit passes directly from a transit operator and disperse them to employees, or they can choose to provide "Commuter Checks" which an employee can then use to purchase transit passes or tickets directly from the operator.

The tax preparation consultant H&R Block has fringe benefit tax information and links for employeers and employees.

How much money will you save by using commuter benefits?

This depends on your income tax bracket. For example a typical combined federal and California state household income tax rate is about 34%. At this tax rate, if you were to spend $600/year on monthly transit passes, you would save $204/year by applying your pre-tax earnings for transit expenses.

How much pre-tax income can be applied to commuter benefits?

As of 2007, you may spend up to $1320.00 per year, or $110.00 per month on commuter checks.

See also: Information for employers

Information for commuters / employees

Your employer can purchase transit services directly from HTA...

Under this arrangement, your employer will provide you with transit passes or tickets (Refer your employer to Information for employers). The disadvantage of this arrangement is that monthly passes should be used soon after they are purchased, as they are good from the day of purchase. An alternative is to use commuter checks...

Commuter checks

Commuter checks are vouchers that can be redeemed for transit passes and tickets by employees. They are programs administered by commuter check companies. Their advantage is that commuter checks often remain valid for longer periods than the transit passes they can be redeemed for.

How to get and use commuter checks:

  1. Ask the appropriate person where you work if they have already arranged to issue commuter checks.
  2. If they do not already issue commuter checks, inform them that it's easy, and it will save you and the business money. Refer them to HTA's information for employers.
  3. Using the web, you'll use one of the popular services such as commutercheck.com or commutercheckdirect.com to order commuter checks in the desired amount. They will work with your company to figure out how to get your checks.
  4. You will receive a check with which to purchase your transit pass from Humboldt Transit Authority. Commuter Checks cannot be directly redeemed onboard buses. You will need to get your transit passes from the HTA office at 133 V St in Eureka. For more information, you can call HTA at (707) 443-0826.

See also: Information for employers