In 2018, small businesses have an array of creative benefits that they can offer their employees in addition to more traditional and expected perks, such as 401(k) matching. There are plenty of perks to demonstrate your appreciation of your employees, that not only show your workers that their employee satisfaction matters to you, but that can also help you attract young talent.
A perfect example of these attainable, attractive, and appreciated perks? Commuter benefits.
Whether you’re looking for more information surrounding commuter benefits before or you’re trying to figure out whether or not they’re the right benefit for your small business, here’s everything you need to know to familiarize yourself with this popular trend.
What are commuter benefits and why do companies offer them?
Commuter, or transportation, benefits allow employees to allocate pre-tax dollars to pay for eligible, work-related transportation and parking expenses—aka the costs they incur getting to and from work every day, sometimes even including parking. Commuter benefits are typically transportation expenses that are deducted from an employee’s paycheck before tax.
Typically these cover expenses like parking, transit passes, and costs incurred from operating a commuter highway vehicle. To be considered a commuter highway vehicle, it must have a seating capacity of at least six adults in addition to the driver and be used at least 80% of the time to take riders between their residences and work.
There are, of course, a few transportation options that aren’t covered by commuter benefits. Those include EZ passes or other highways, bridge, or tunnel tolls; fuel or mileage; expenses incurred while traveling for a client meeting; flights; and bike-related expenses.
How do commuter benefits work? Are they fringe benefits?
Transportation benefits are one of the many types of fringe benefits that companies offer these days, especially smaller businesses or newer ones that aren’t quite at the point of being able to offer more expensive and traditional benefits.
Due to recent legislation, companies no longer receive the financial benefits that used to be customary from paying for employee commute benefits. The benefit now comes from the employee paycheck, but the funds go further as they are not taxable. Today there are even a handful of companies like WageWorks that make the whole process easy peasy to carry out.
How much do employees save by using commuter benefits?
According to Commuter Benefits Solutions, this added perk “saves both your company and your employees money… commuter benefits are considered tax-free benefits, not employee wages, so your company can save on average 7.65% on payroll taxes.”
When it comes to the employee side of things, employees who participate in a commute program “don’t have to pay income taxes on the money they set aside for their commuting costs, saving up to 40% on their commuting expenses.” For both employers and employees, commuter benefits can mean some serious savings.
Like all things business, whether or not you should offer commuter benefits is entirely up to you and your small business. There is no concrete right or wrong answer, only what’s right for you.