Save money on your commute: 5 things to know about Commuter benefits

What are Commuter benefits? Commuter benefits allow employees to use tax-free money to pay for eligible parking, commuting, and transit expenses. As you consider your options during open enrollment this year, here are 5 essential things you need to know about setting up and using a Commuter account.

1. How much money could I save?

You could be saving about 30% on your parking and transit costs by using pre-tax money.¹ For example, if you spend $250 a month to get to and from work, you could be saving $75 each month in taxes. That’s more money in your pocket each month. The savings add up fast, freeing up your budget for breakfast burritos, coffee breaks, or other essentials that fuel your day-to-day.

2. How do payment options for Commuter benefits work?

Payment options for Commuter benefits vary by employer, typically functioning as a pre-tax spending account or a pay-as-you-go system. These benefits are funded via pre-tax payroll contributions. How you spend your benefits may vary slightly based on how your organization sets up your plan:

• Traditional pre-tax spending account: You elect pre-tax contributions, which accrue a balance in your Commuter account. You can then spend these funds on eligible parking and transit expenses or use them to reimburse yourself.
• Pay-as-you-go basis: You simply place orders directly from your Commuter account. After you place an order, the money will be automatically deducted from your paycheck on a pre-tax basis.
• Dedicated Commuter Card: Pre-tax payroll deductions will correspond to your card spending.

Be sure to review your plan documents to find out what type of Commuter benefits your organization offers.

3. What eligible expenses do Commuter benefits cover?

Commuter benefits generally cover eligible transit expenses — such as subway, bus, train, ferry, rideshare, or vanpools — eligible parking expenses — such as daily or monthly parking fees — or both. When your organization sets up your Commuter benefits, they will designate specific eligible expenses.

Always review your program documents to find out exactly what transit and parking costs are eligible under your specific employer’s plan.

4. Can I change Commuter benefits outside of open enrollment?

Yes, you can start, stop, or change your Commuter benefit contributions at any time, without waiting for the annual open enrollment window.

Beyond the tax savings, the next best part of Commuter benefits is the flexibility. If you elect to contribute to a Commuter account, you can choose to change contributions or stop them at each benefit cycle (such as month-to-month). If your commuting habits change mid-year, you can easily adjust your benefit elections and contribution amounts.

5. What are the IRS spending limits for Commuter benefits?

The Internal Revenue Service (IRS) caps the amount you can spend using Commuter benefits with both monthly limits as well as annual limits. There’s a maximum for transit and a maximum for parking expenses. These maximums dictate exactly how much tax-free money you can set aside. Your employer might also set limits that are less than the IRS maximums. Be sure to check the details of your benefits plan.

For the latest IRS Commuter limits, please check out this page.

More Frequently Asked Questions

Do Commuter benefits expire at the end of the year?
No, Commuter benefits do not have an annual “use-it-or-lose-it” rule. Money you contribute to your Commuter benefits will roll over and stay available through the next year and beyond.

Can I use Commuter benefits to pay for gas or tolls?
No, Commuter benefits cannot be used for gas, tolls, or mileage. They are strictly reserved for eligible mass transit passes, vanpooling, and qualified parking expenses.

What happens to my Commuter benefits if I transition to working from home?
If you begin working from home, your funds will remain in your account and roll over each month since there is no deadline to spend. You can safely pause your contributions at any time without having to wait for the next open enrollment period.

What happens to my Commuter benefits if I leave my employer?
The only time you risk losing your money is if you are terminated, change employers, or retire. In case of termination, you may still be able to use your Commuter Card for 90 days — giving you plenty of time to spend remaining transit funds. However, Parking Commuter Card funds are generally forfeited immediately upon your termination date (as always, plan rules may vary).

You also usually have 6 months following the end of the benefit month to file claims to be reimbursed from your account for expenses incurred prior to your termination.

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