Tax Advantages and the Law

Using SmartBenefits® to offer qualified transportation fringe benefits for commuting is like putting money in the bank. Employers may save hundreds per employee each year on payroll taxes and qualify for local incentives. Employees may save over $1,600 in payroll and income taxes annually.

Potential Savings Under The Dec 2017 Tax Law

  Private Sector, State and Local Govt and Non-Profits
Employee
SmartBenefits® Savings
Transit Only
$260 / Month
Parking Only
$104 / Month
Transit & Park
$364 / Month
Annual Benefit or Payroll Deduction $ 3,120 $ 1,248 $ 4,368
Federal Income Tax  22.00% (686) (275) (961)
FICA: Social Security  6.20% (194) (77) (271)
FICA: Medicare  1.45% (45) (18) (63)
State Income Tax  7.00% (219) (87) (306)
EMPLOYEE TAX SAVINGS $ (1,144) $ (457) $ (1,601)
Net Cost to Employee $ 1,976 $ 791 $ 2,767
 
Employer SmartBenefits®
Savings Per Employee
Transit Only
$260 / Month
Parking Only
$104 / Month
Transit & Park
$364 / Month
Annual Benefit or Payroll Deduction $ 3,120 $ 1,248 $ 4,368
FICA: Social Security Match  6.20% (193) (77) (270)
FICA: Medicare Match  1.45% (45) (18) (63)
Unemployment FUTA  0.60% (19) (7) (26)
Unemployment SUTA  2.62% (82) (33) (115)
EMPLOYER PER EMPLOYEE SAVINGS $ (339) $ (135) $ (474)

"You can generally exclude the value of transportation benefits that you provide to an employee during 2018 from the employee's wages up to the following limits:

  • $260 per month for combined commuter highway vehicle transportation and transit passes [including Metro's SmarTrip® smart cards].
  • $260 per month for qualified parking." 1

The chart above reflects the savings for a roundtrip from Glenmont to downtown DC for employees that work a five day week and park at the Glenmont Metrorail lot (which costs less than $260 a month).

No matter how you offer it, SmartBenefits® is a powerful tool for helping employers recruit, retain, and motivate employees.

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

Tax Laws

  • 1 The Transportation (Commuting) Benefits section starting on page 19 of IRS Publication 15-B (2017) 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
    Also see IRS Revenue Procedure 2017-58 Section 3.17 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.