Commuter Benefits Program

Commuter Tax Benefits Program—help Your Employees Save Up To $900 Per Month

The Federal Government allows employees to set aside a certain portion of pre-tax wages, which can be used for mass transit commuting costs and parking while reducing federal taxable income (IRS Code, Section 132 (f) Qualified Transportation Fringe). The Federal Government currently allows a pre-tax commuter benefit of $300 per month through payroll deduction. That means employees could save up to $900/year by not paying federal income tax on that salary. This applies to most public transit systems in the Philadelphia/South Jersey region, including NJ TRANSIT, PATCO, SEPTA and others. This benefit is also available to those employees participating in NJ TRANSIT’s Vanpool Sponsorship Program.
Governor Phil Murphy signed a bill into law requiring New Jersey employers of at least 20 employees to offer a pre-tax transportation fringe benefit to employees (who are not currently in a collective bargaining agreement) beginning March 1, 2020.

How Can Employers Participate?

To take advantage of these tax savings, an employer needs to opt-in to either the NJ TRANSIT Bulk Sales program or one of the programs offered by a third party provider, like Beniversal/eTRAC, Commuter Benefit Solutions, Edenred Commuter Benefit Solutions, TotalBen, TranBen, or TransitChek by WageWorks. In addition to these programs, payroll service companies like ADP, offer a transit pre-tax benefit option. A common name for the benefit is “commuter tax benefit”.
Tax Free commuter benefits can be structured as an employee-funded tax-free payroll deduction; as an employer-funded benefit; or the costs can be shared by employer and employee. The benefit can be delivered in the form of transit provider-specific passes or universally accepted vouchers and debit cards.