A transit account — often called a commuter expense account — allows employees to contribute pre-tax dollars from their paychecks to pay for parking and commuting expenses.

Benefits of a transit account

• Monthly transit passes or vouchers can be delivered to employees’ homes.
• The plan can pay parking garages or lots directly, so employees don’t have to pay anything up front.
• Employees can conveniently manage their accounts online.
• Employees can change their enrollment preferences — commute option and contribution amount — each month.

Tax savings
Employees can get significant tax savings with a transit account. Consider this example:

Tom drives his car to a park and ride and then continues his commute in a vanpool. He pays $120 for parking and $45 for the vanpool, totaling $165 per month. By contributing to his commuter expense reimbursement account with pretax dollars, Tom saves approximately $58.82 each month.*

*Tax savings are based on 28 percent tax bracket and 7.65 percent FICA (including Medicare), which equal a total tax of 35.65 percent. Hypothetical example is presented strictly for educational purposes and doesn’t include other potential factors, such as pretax contributions to a qualified retirement plan, mortgage or other deductions.