What are commuter benefits?
Nobody likes commuting to work. Who wants to start their day sitting in stop-and-go traffic, squeezed into crowded trains, or waiting at a bus stop?
Still, commutes are an unavoidable part of the work day for most adults. American workers make over 50 billion individual commutes to and from work each year.
Commuter benefits can make your employees’ commutes a little bit more pleasant by easing their transportation costs.
Through these benefits, employees are given some kind of financial tool to pay for their transportation costs. Usually it’s something like debit cards, reimbursements, vouchers, smart cards, or transit passes. Transit programs are typically designed to meet a range of transport needs, so regardless of how your employees get to work, they’re covered.
As of 2021, commuter benefits currently allow employees to spend up to $280/month, tax free (this is determined and changed yearly by the government), on several forms of transportation: bus, train, subway, trolley, light rail, ferry, parking, rideshares, and more.
How do employees use commuter benefits?
One of your project managers lives in the suburbs of Seattle. Every morning, he drives to the Park-and-Ride nearest to their home and takes the light rail to work to avoid having to deal with city parking. Still, it takes him about 45 minutes from door to door. Not only does this take up a big chunk of his morning, it’s also costly having to pay for gas and light rail tickets.
Using his commuter benefit, he receives a debit card that he funds through pre-tax contributions. He’s able to use this card to pay for his gas and light rail ticket. By paying for his transportation costs before tax, his taxable income is effectively reduced, saving him money in the long run.
How do commuter benefits impact employees?
The potential savings are real. Depending on where they live and where they’re going, the average person spends anywhere from $2000 to $5000 on transportation each year. But by using a pre-tax commuter account, employees save 30% on average — adding up to as much as $450 annually.
Why should employers offer commuter benefits?
Over time, the trek to work can push some folks over the edge. They may end up deciding that the back-and-forth just isn't worth it. 23% of workers quit their jobs because of lousy commutes, and 60% don’t feel like their employers have done enough to help.
Commuter benefits can save employers $40/month per employee, as well as up to 7.65% in payroll taxes for each participating employee. Employers save money because, as more employees set aside nontaxable money from their income for commuting, your payroll goes down, as do the taxes you would have to pay on payroll. This makes commuter benefits a great, low-cost way for an employer to build a robust benefits package that will attract and keep talent.
We don’t need to tell you why remote work is on the rise — no commute means more time, more money, and less stress. About 20% of all workers are actively seeking remote work, and the lack of commute is among the top-cited reasons why. But not all jobs can be done from home; there will always be work that has to be done on site. With commuter benefits, employers can offer their on-site employees similar upsides as remote work.
With an easier commute, your employees can start their day off on the right foot, creating a more engaged team, sharpened productivity, and higher team morale.