SmartBenefits is Smart for Employers

Employers with employees in DC, Northern Virginia and Southern Maryland can take advantage of the tax law to offer SmartBenefits as a low-cost, tax-free commuter benefit to employees. And, unlike third-party administrators, Metro's SmartBenefits® program is free of charge.

No matter how you offer it, as a direct benefit or a pre-tax payroll deduction, SmartBenefits® is a powerful tool for helping employers recruit, retain, and motivate employees.

For Employers

Tax Advantages and the Law

Using SmartBenefits®, employees can save over $1,600 in payroll and income taxes annually. Employers can avoid payroll taxes on the amount of SmartBenefits provided and qualify for local incentives.

This chart reflects the savings for a roundtrip from Glenmont to downtown DC for employees who work a five-day week and park at the Glenmont Metrorail lot (which costs less than $265 a month).

  Private Sector, State and Local Govt and Non-Profits
Employee
SmartBenefits® Savings
Transit Only
$265 / Month
Parking Only
$104 / Month
Transit & Park
$369 / Month
Annual Benefit or Payroll Deduction $ 3,180 $ 1,248 $ 4,428
Federal Income Tax 22.00% (700) (275) (975)
FICA: Social Security 6.20% (198) (78) (276)
FICA: Medicare 1.45% (47) (19) (66)
State Income Tax 7.00% (223) (88) (311)
EMPLOYEE TAX SAVINGS $ (1,144) $ (457) $ (1,601)
Net Cost to Employee $ 2,012 $ 788 $ 2,800
 
Employer SmartBenefits®
Payroll Tax Reduction
Transit Only
$265 / Month
Parking Only
$104 / Month
Transit & Park
$369 / Month
Annual Benefit or Payroll Deduction $ 3,180 $ 1,248 $ 4,428
FICA: Social Security Match 6.20% (198) (78) (276)
FICA: Medicare Match 1.45% (47) (19) (66)
Unemployment FUTA 0.60% (20) (8) (28)
Unemployment SUTA 2.62% (84) (33) (117)
EMPLOYER PAYROLL TAX REDUCTION $ (349) $ (138) $ (487)

You can generally exclude the value of transportation benefits that you provide to an employee during 2019 from the employee's wages up to the following limits:

  • $265 per month for combined commuter highway vehicle transportation and transit passes [including Metro's SmarTrip® cards].
  • $265 per month for qualified parking. 1

Assuming a 21% tax rate, the employer's net tax cost to offer the commuter benefit in the example would be $443. ($4,428 non-deductible qualified transportation benefit * 21% = $930 less $487 in avoided payroll tax = $443.)

Maryland employers may also qualify for additional tax savings under the Commuter Choice Maryland Benefits Program and Montgomery County's FareShare Program.

1 The Transportation (Commuting) Benefits section starting on page 20 of IRS Publication 15-B describes the qualified transportation benefits that employers may offer under the Internal Revenue Code (26 U.S.C. Section 132(f)). https://www.irs.gov/pub/irs-pdf/p15b.pdf PDF Icon

Qualified transportation benefits include providing a transit pass benefit. The definition of a transit pass includes smart cards like Metro's SmarTrip® card as described in IRS Revenue Ruling 2014-32 PDF Icon.

As always, check with your tax advisor before making any tax decisions.

Considering a Third-Party Administrator?

  • Third-party administrators charge a fee for their services. SmartBenefits® is fee-free.
  • SmartBenefits® is managed locally by transit benefit experts.
  • Some TPAs offer debit cards that let you transfer tax-advantaged funds directly to a SmarTrip® card. In that case, the funds for transit and parking are commingled. Consult your tax advisor before making a decision.

Get Started

Ready to open a SmartBenefits® employer account? Submit an application and an account representative will get in touch with you. Remember, Metro does not charge a fee to participate in SmartBenefits®, so there's no risk to apply.

Employees may participate only after their employer has enrolled in SmartBenefits®.

Have questions? Click the For Employers link in the navigation section on the left to learn more. Interested employers may also send an email to our SmartBenefits® account team.

Employer Resources

SmartBenefits® Employer Brochure PDF Icon

Free City & County Transportation Advisors