Commuter benefits are employer-sponsored benefits that help employees save money on their commute to work. They can be structured as either a pre tax benefit account or a post tax stipend or perk. Pre-tax commuter benefit accounts are accounts into which employees deposit money pre-tax to pay for commuting expenses like mass transit fares, parking near the office and carpooling expenses. Post-tax commuter stipends and perks can be used to pay for expenses like bike repair, maintenance on the employees’ personal cars, gas, rideshare services and more. Employees pay income taxes on the value of the post-tax commuter benefits they receive.
Commuter employee eligibility requirements
- Employees must access these benefits through their employer.
- Employees must work enough hours to be considered a “covered employee” at their company.
- Remote workers can qualify to reimburse for commuting expenses if they take approved transportation to a coworking office space.
- Commuter benefits are compatible with any health plan and other pre- and post-tax benefits.
Where companies are required to offer commuter benefits
Employers with 50 or more covered employees, located in one of these cities or states, are required to offer their employees some form of commuter benefit. Berkeley requires companies with 10 or more employees to offer commuting benefits.
Why offer it?
- Save money. Employees deposit their money pre tax, which lowers employers’ FICA responsibility.
- Improve compensation packages without raising salaries across the board. Commuters reimburse only for what they need to pay for their commute.
- Provide an incentive for employees to return to the office.
- Improve company culture. Most employees feel employers should pay for their commute.
- Support recruitment and retention efforts.
- Reduce employees’ financial stress. Employees currently pay an average of 19% of their paycheck toward their commute.
- Stay compliant with local laws. Many local and state governments require employers of a certain size to offer employees a commuter benefit.
Contribution limits and eligible expenses
2025 commuter contribution limits
In 2025, employees can contribute up to $325 per month into their pre tax accounts.
Post tax perks or stipends don’t have an IRS-imposed limit.
Pre-tax eligible expenses
Pre tax commuter benefits can be used for the following expenses:
- Mass transit fares like bus, train, subway, ferries, water taxi, and light rail.
- Carpooling expenses.
- Parking near the office or mass transit center.
Post-tax eligible expenses
Post tax commuter benefits can be used for the following expenses, which can be further customized by the employers:
- Parking
- Rideshare services
- Gas for personal car
- Mileage reimbursements for personal car
- Company car
- Personal car maintenance
- Bike maintenance
- Tolls
- Car insurance
- Bike share
- Hybrid charging stations
Lively's Commuter benefits guide
This comprehensive guide covers pre- and post-tax commuter benefits, how to offer them, and why.
5 reasons why you should offer commuter benefits
Ease employee stress and strengthen recruitment and retention.
Commuter benefits made easy
Offer employees a modern, streamlined, flexible commuter experience including tap-to-pay with Lively.