How Can Commuting On Kitsap Transit Save You Money?

Federal law gives employers ways to reduce the cost of commuting for employees by offering one or both of these allowances for public transportation or qualified parking:

1. A tax-free employer-paid subsidy
2. A pre-tax employee-paid payroll deduction

Tax-exempt and pre-tax limits are set by the IRS. The following are the limits for the 2014 tax year:

• $130 per employee per month for vanpool, bus, ferry or rail
• $250 per employee per month for qualified parking

The employee can set aside up to $130 of pre-tax income per month when he or she pays part or all of the cost of public transportation through a pre-tax payroll deduction. The employee saves federal withholding and FICA payroll taxes on the amount deducted, while the employer avoids paying FICA on the amount deducted.

Employees may also share the cost with employers using after tax income. Pre-tax payroll deductions are referenced in the Internal Revenue Code, Section 132(F), as amended by TEA-21, Title IX, Section 910.