Can You Use Commuter Benefits for Tolls?

Commuter benefits are employer-sponsored programs that allow employees to use pre-tax income for specific work-related transportation expenses, reducing their taxable income. Understanding the scope of these benefits, especially concerning tolls, helps employees maximize their savings.

Understanding Commuter Benefits

Commuter benefits are employer-sponsored programs allowing employees to set aside pre-tax dollars for qualified commuting expenses. These benefits fall under Internal Revenue Code Section 132(f), defining them as qualified transportation fringe benefits. The two primary categories are qualified mass transit expenses and qualified parking expenses. Mass transit expenses include costs for transportation in a commuter highway vehicle or transit passes, such as bus, train, subway, or ferry fares. Qualified parking expenses cover fees for parking near the workplace or at a location from which an employee commutes to work via mass transit. These deductions reduce an employee’s taxable income.

Tolls and Commuter Benefit Eligibility

While commuter benefits cover many commuting costs, highway, bridge, and tunnel tolls do not qualify as eligible expenses for pre-tax commuter benefits under IRS guidelines. Tolls are explicitly not included in the definition of qualified transportation fringe benefits. These exclusions are listed alongside other non-eligible transportation costs, such as gasoline, vehicle maintenance, or personal travel expenses. This distinction is important because commuter benefits are designed for specific types of public transportation or parking costs, not general road usage fees. Employees cannot use pre-tax commuter benefit funds to pay for tolls during their commute.

Managing Toll Expenses for Commuting

Since tolls are not covered by pre-tax commuter benefits, employees pay for these out-of-pocket. Many toll authorities offer commuter discount programs or payment plans that help frequent commuters save money. These plans, often associated with electronic toll transponders like E-ZPass or FasTrak, may provide reduced rates for frequent use or specific routes. While these toll transponder accounts are convenient for automated toll payments, they cannot be directly linked to a pre-tax commuter benefit account for paying tolls. Employees should manage toll expenses separately from their commuter benefit accounts, using personal funds or enrolling in available toll authority discount programs.

Important Program Guidelines

Commuter benefits are subject to monthly limitations set by the IRS. For 2025, the monthly exclusion limit for qualified mass transit expenses is $325, and the limit for qualified parking expenses is also $325. These limits apply to both employee pre-tax and employer contributions. Unused funds typically roll over from month to month and year to year, unlike some other pre-tax accounts. However, if an employee leaves their employer, retires, or is terminated, any remaining balance is generally forfeited, as the IRS prohibits refunding these funds directly to the employee. Employees should consult their employer or benefits administrator for specific program details, as individual plans may have unique rules regarding eligible expenses, payment methods, and policies for unused funds upon separation from employment.