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Commuter benefits for today’s workforce


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Are commuter benefits still relevant for the modern workforce?

As the work environment changes, it’s always good to check if commuter benefits are still helpful for both workers and employers. HR professionals should be aware of commuter benefits as well as offerings like commuter flex spending accounts. Let’s review the types of benefits available and the advantages and disadvantages of using them.

The current state of commuter benefits

Commuter benefits are designed to help workers save money on their daily commute to and from work. These benefits typically allow workers to set aside a portion of their pre-tax income to pay for eligible travel expenses, such as public transit fares and parking fees. The IRS has set the monthly exclusion for qualified parking and commuter highway vehicle travel and transit passes at $325 for 2025 (limits are updated yearly).

Types of commuter benefits offered by employers

Pre-tax transit benefits: Employees can use pre-tax dollars to pay for public travel expenses like bus, train, subway and ferry fares. This benefit helps reduce the overall cost of traveling to work and can be a significant financial relief for workers who rely on public transit.

Pre-tax parking benefits: Similar to transit benefits, workers can use pre-tax dollars to pay for parking expenses. This benefit is particularly useful for workers who drive to work and need to pay for parking in urban areas.

Employer-subsidized commuter benefits: Some employers offer subsidized transit and parking benefits, providing workers with free or discounted access to commute to and from work. This benefit encourages the use of mass transit and parking that can help reduce traffic congestion and environmental impact.


Vanpooling programs: Employers may offer vanpooling programs, where workers share rides to work in a company-sponsored van. This benefit promotes carpooling, reduces the number of vehicles on the road, and can lead to cost savings for workers.

Bike traveling to work reimbursements: Although the exclusion for qualified bicycle traveling to work reimbursements is suspended until 2026, some employers still offer reimbursements for bike-related expenses, such as maintenance and gear. This benefit encourages eco-friendly traveling to work and promotes a healthy lifestyle.

Pros of commuter benefits

  • Cost savings: One of the most significant advantages of commuter benefits is the cost savings for workers. By using pre-tax dollars to pay for travel expenses, employees can reduce their taxable income. This leads to valuable tax savings.
  • Increased employee satisfaction: Offering commuter benefits can enhance employee satisfaction. Workers appreciate the financial relief and support from their employer in managing their daily commute.
  • Environmental impact: Commuter benefits that promote the use of public transit, carpooling and biking can help reduce traffic congestion and lower carbon emissions. Employers can contribute to a greener environment and demonstrate their commitment to sustainability.
  • Recruitment and retention: Commuter benefits can be a valuable tool for recruitment and retention. Prospective workers may be attracted to companies that offer comprehensive benefits packages, including commuter benefits.

Cons of commuter benefits

  • Administrative complexity: Implementing and managing commuter benefits programs can be complex. Employers need to ensure compliance with IRS regulations and may require additional resources to administer the benefits effectively.

  • Limited applicability: Commuter benefits may not apply to all workers, especially those who work remotely or have flexible work arrangements. Employers need to consider the diverse commuting patterns of their workforce.

  • Changing commuting patterns: Commuting patterns have significantly changed in recent years, with many workers choosing to work from home or adopting hybrid work models. Employers must adapt their commuter benefits programs to reflect these changes and ensure that benefits remain relevant.

  • Cost to employers: While commuter benefits can lead to cost savings for workers, they may also represent an additional expense for employers. Subsidizing transit passes or offering vanpooling programs can incur costs that need to be weighed against the benefits.


Commuter Flexible Spending Accounts

Using a Commuter Flexible Spending Account (FSA) can help a company improve benefits for employees and reduce their commuting costs.

A Commuter FSA is a pre-tax benefit plan designed to help employees manage their commuting costs. Employees can use pre-tax dollars to pay for eligible expenses related to commuting, such as transit passes, parking fees and vanpooling.

By utilizing a Commuter FSA, both employees and employers can enjoy significant tax savings. Employees reduce their taxable income, leading to lower tax liabilities, while employers benefit from decreased payroll taxes. 

Incorporating commuter benefits, including FSAs, into a company’s overall benefits strategy is more than just a financial decision—it can improve employee satisfaction and productivity, promote environmental responsibility, and bolster the company’s reputation. With thoughtful planning and execution, commuter benefits can become a cornerstone of a complete benefits strategy, driving both corporate growth and employee wellbeing.

At Alight, we make it easy for companies to offer commuter benefits that truly make a difference. Our platform helps you set up and manage commuter benefits and FSAs with minimal hassle. We handle the details, from enrollment to compliance, so you can focus on your people. With Alight, your employees get a smooth experience, clear savings and support when they need it. Let us help you build a benefits program that keeps your team happy, engaged and moving forward.

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