You Can Even Save on Your Taxes! Section 132(f) of the IRS Code allows employers to offer their employees a pre-tax deduction (similar to health insurance or retirement) for commuting costs associated with taking public transit or vanpooling. A benefit is also available for monthly paid parking. Check with your human resources or benefits department to learn if your company participates.
How Much is the Benefit?
For 2023, the maximum monthly pre-tax deductions are:
- $300 for the cost of public transit (bus or train pass) or a vanpool
- $300 for the cost of monthly paid parking
So, if your employer offers this benefit, and you spend $300 on bus passes every month, that adds up to $3,600 a year that will be exempt from income tax!
For more information on the types of pre-tax benefits that can be offered by employers, click HERE.