What is a Commuter Account?

Employees contribute into a qualified transportation fringe benefit account that will reimburse them for the cost of commuting to and from work.

 
 

How it Works

  1. First, estimate your parking or commuting expenses for the year;
  2. Next, decide how much you want to deposit into your account each pay period (this can be changed at any time during the year);
  3. The amount you designate is withheld from your paycheck before taxes are taken out and deposited into your own individual account.
  4. After you incur eligible expenses and submit your claims, the money in your account is paid back to you tax-free.

Examples of Qualified Expenses

  • transit passes,
  • commuter highway vehicle expenses,
  • bicycle commuting expenses, and
  • qualified parking expenses.
 
 

Tax Savings

Employees make contributions through a pre-tax salary conversion agreement, which means that the employee does not pay Social Security, Medicare, federal, state, or local taxes on the amount contributed each year.  The federal government sets maximum contribution amounts each year.

Employers do not pay FICA (Social Security + Medicare) taxeson the amounts contributed, which means 7.65% savings on the total contributions made by their employees each year.