Considering commuter benefits? 5 things you need to know

Commuter benefits let members use tax-free money to pay for eligible parking and transit expenses. As you consider whether to use commuter benefits this year, here are five things you need to know.

#1 Payment options vary depending on your organization

Most organizations offer commuter benefits through pre-tax payroll contributions. This means money is taken out of your paycheck before taxes are calculated, which lowers your taxable income and saves you money.

Some organizations also provide employer-funded contributions or a combination of both. Your organization's plan details will specify which payment options are available to you.

You may also have access to a Commuter Card to pay for eligible expenses directly. Check with your employer or benefits administrator for specifics.

#2 Eligible expenses vary based on your organization

Commuter benefits generally cover qualified transportation expenses, including transit passes, vanpool fees, and qualified parking at or near your workplace. The specific expenses covered depend on what your organization's plan allows.

Common eligible expenses include public transit (bus, subway, train, ferry), vanpool services, and qualified parking (parking at or near your workplace or at a location from which you commute). Rideshare services like Uber or Lyft and bicycle expenses are generally not eligible.

#3 You can start, stop, or change contributions at any time

Unlike other benefits that require you to wait for open enrollment, commuter benefits are flexible. You can start, stop, or change your pre-tax contributions at any time — typically on a monthly basis.

This flexibility makes commuter benefits ideal for members whose commuting needs change throughout the year, whether due to seasonal schedules, remote work arrangements, or other factors.

#4 There's no annual 'use-it-or-lose-it' rule

One of the great advantages of commuter benefits is that unused funds roll over from month to month. There's no annual deadline to spend your balance, so you can accumulate funds for future commuting expenses.

However, if you leave your employer, unused commuter benefit funds may be forfeited depending on your organization's plan rules. Check your plan details for specifics.

#5 Commuter benefits have spending limits

The IRS sets monthly limits for pre-tax commuter benefits. For the current year's transit and parking limits, visit this page. These limits are adjusted annually for inflation.

The transit limit applies to all qualified transit expenses combined (public transit, vanpool, etc.), while the parking limit applies separately to qualified parking. For the most up-to-date limits, visit this page.

For more information about commuter benefits, visit our Help Center or check out our on-demand webinars.