What are Commuter Benefits?
Commuter benefits are a simple way for both employers and employees to save money. Put in place to encourage the use of public transportation, these programs allow for employers and employees to use pre-tax dollars to pay for a variety of commuting expenses.
IRS issues standard mileage rates for 2021
On December 22, 2020, the Internal Revenue Service issued the 2021 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical, or moving purposes.
Beginning on January 1, 2021, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) are as follows:
- 56 cents per mile driven for business use (down 1.5 cents from the rate for 2020)
- 16 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces (down 1 cent from the rate for 2020)
- 14 cents per mile driven in service of charitable organizations (unchanged from 2020)
**WEX is making the appropriate updates based on these mileage rate changes. A copy of IRS Notice 2021-02 can be viewed here.
How Commuter Benefits Help Businesses
Your employees enroll in the beneﬁt and contribute pre-tax and post-tax dollars to cover expenses.
• You track + update payroll deductions.
• Your employees pay for their commute using their beneﬁts debit card. They can also use their commuter beneﬁts to add to their transit or parking app, with an autoload program, or to purchase fares online or at a ticket vending machine.
• Transit: They can use their beneﬁts debit card or mobile app to pay for eligible mass transit (buses, ferries, trains, and more) along with vanpooling services like uberPOOL, VIA or Lyft Shared to or from work.
• Parking: Their commuter funds are eligible using SpotHero and they can use their beneﬁts debit card at parking garages, lots, and facilities across the city.
• Your employees use ONE platform, ONE debit card, and can use our mobile app when they’re on-the-go.
• Save money by using pre-tax dollars to pay for transit to-and-from work.
• Use streamlined payment solutions (no paper forms, here!) that can be customized based on their preferred form of transportation.
• Use ONE platform to access both their commuter CDH benefits.
And when they’re on-the-go?
- Employees can access the information they need on our mobile app.
- Mass transit + parking
- Commuter benefits encourage your employees to ditch the tiring task of driving to and from work every day while providing them with flexible ways to save money through pre-tax dollars. And these pre-tax benefits help your business reduce its payroll tax burden.
What do commuter benefits cover?
Mass transit: Commuter benefits can be used for expenses incurred for a pass, fare card, voucher, or similar item for transportation on mass transit. Mass transit examples include trains, buses, and subway.
Parking: Eligible parking expenses include amounts paid for parking of your vehicle at or near work or at a location used to commute to work (such as a park-and-ride facility).
Vanpooling: Funds can be used for expenses incurred in a commuter highway vehicle, which is defined as any vehicle that seats at least six adults, not including the driver. At least 80 percent of the mileage in the car must be used to transport employees to and from work, and the number of employees is, on average, at least half of the adult seating capacity of the vehicle. Lyft Shared and uberPOOL comply with IRS vanpooling regulations.
What isn’t included?
Commuter benefits cannot be used to pay for tolls, taxis, gasoline, mileage, business trip costs, airport parking fees, or residential parking fees.
How do workers benefit from commuter benefits?
Healthier results: Your employees’ wellness affects their health—and your bottom line. A recent study found that unhealthy workers cost companies $1.1 trillion in lost productivity annually.11 And providing healthcare for obese employees costs $12.7 billion due to increased costs in healthcare, sick leave, disability, and life insurance.
Decreased stress: Employee stress can lead to long-term health issues, including heart disease, obesity, diabetes, and depression. And stress can have more immediate and damaging effects on a business, leading to missed deadlines, employee turnover, and damage to your company’s image. Unfortunately, the drive to and from work can be a significant stress trigger. Giving employees with pre-tax incentives to take mass transit or van pooling can help reduce stress, which increases the productivity and effectiveness of your business. And the financial incentive and tax savings that come with commuter benefits also alleviate another important stress trigger, since nearly half of workers say financial stress has caused them to miss work or has reduced their productivity.
Less time driving: There’s never enough time in the workday. The average American works somewhere between 44 hours and 47 hours every week. One-third of employees work more than 50 hours per week, and that doesn’t include the time spent driving to and from work. These time commitments are threatening employees’ abilities to maintain a healthy work-life balance and can lead to employee burnout.
Encouraging employees to take mass transit or van pooling helps them avoid the adverse effects driving can have on their brain and mental well being. When they’re riding instead of driving, they can also spend time on other things, whether it’s catching up on personal emails, listening to a meditation, or starting their day with a favorite podcast or music. This may put them in a better state of mind entering and leaving work.