City of Aspen - Transportation - Commuter Tax Benefits

Commuter Tax Benefits

Offer employees a great benefit while saving money on payroll taxes!

cut payroll taxes
reduce traffic & pollution
attract the best employees
decrease turnover

What modes of transportation qualify?

Transit and vanpools qualify under the tax-exempt program.

How do I get started?

It's easy! If you provide transit passes or vanpools to your employees, just keep your receipts of purchase and a list of pass recipients and vanpool users. There is no additional paperwork involved. You don't have to file a plan and the IRS does not have to approve your program. You can start your program at any time of the year and can make it as formal or informal as you like. For details or to make sure you are in compliance, consult your corporate accountant or tax attorney.

How do I take advantage of the commuter tax benefit?

Offer free bus passes or vanpool services to employees as an additional benefit.
Offer pre-tax payroll deductions and let the employees purchase bus passes or pay vanpool fares themselves.
Share the benefit and split the cost. You pay half the cost of the bus passes or vanpool fares and your employees pay the other half using pre-tax income.

Here's how it works…

Option 1 - Employer Offers Tax-free Transportation Benefits to Employees

You, the employer, offer your employees tax-free transportation benefits such as bus passes and vanpool services. The law allows you to deduct the full cost of these benefits as a business expense. Your employees, in turn, can receive the benefit to a value of up to $100 per month on a tax free basis [IRC 132 (f)].

Option 2 - Employees Set Aside Pre-Tax Income to Pay Transportation Expenses

You, the employer, offer your employees the option of setting aside a portion of pre-tax income to purchase transit passes or pay vanpool fares. The set aside amount is tax-free up to $100 per month [9IRC 132 (f)]. Consult your corporate accountant or tax attorney for details.

Option 3 - Share the Benefit and Split the Cost

You, the employer, split the cost of purchasing transit passes or paying vanpool fares with your employees. You cover a portion of the cost directly and your employees cover the rest out of pre-tax dollars.

For more information, call (970) 920-5038.