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What should employees know about pre-tax commuter transit benefits?
What should employees know about pre-tax commuter transit benefits?

Employees can reduce their taxable income and owe less on their income tax.

Will Sanderson avatar
Written by Will Sanderson
Updated over a year ago

IRS Code 132(f) (which you can read here) outlines the services which employees can consider as a pre-tax benefit. This includes (among other services) bus, train, subway, and employee-owned bicycle maintenance and storage.

For employees, this means that their spend on transit can be removed from their taxable income, reducing the amount of income tax they have to pay.

This reduction has a monthly limit. In 2022, this is $280 (source).

An example to help bring this to life: an employee has gross wages (total pay in the period) of $1,000 in a pay period and they spend $100 in the period on their bus pass. Their taxable income for this period will be reduced to $900.

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