What Can I Use Commuter Benefits For?

Commuter benefits programs offer employees a valuable way to manage their work-related transportation costs. These employer-sponsored programs allow individuals to set aside pre-tax income for eligible commuting expenses. This reduces taxable income, leading to savings on federal income tax, Social Security, and Medicare taxes, as contributions are excluded from gross income.

Eligible Mass Transit Expenses

Commuter benefits can be applied to a variety of mass transit options. This includes common forms of public transportation such as bus, subway, train, and ferry services. Employees can typically use their pre-tax funds to purchase fares, passes, or tokens for these transit systems.

Eligible expenses also extend to qualified vanpool services, which provide a structured carpooling alternative. For a vanpool to qualify, the vehicle must have a seating capacity of at least six adults, not including the driver. Furthermore, at least 80% of the mileage for the year must be for transporting employees between their residences and places of employment. During these trips, at least half of the adult seating capacity, excluding the driver, must be filled by employees. For 2025, the monthly pre-tax limit for combined transit and vanpool expenses is $325.

Eligible Qualified Parking Expenses

Qualified parking expenses are another category covered by commuter benefits, providing a tax-advantaged way to pay for parking costs associated with one’s commute. “Qualified parking” specifically refers to parking provided to an employee on or near the employer’s business premises. This also includes parking at a location from which the employee commutes to work via mass transit, a commuter highway vehicle, or carpool.

Examples of eligible parking facilities include commercial parking garages, metered street parking, and designated parking lots. However, parking at or near an employee’s residence is generally not considered an eligible expense unless it is specifically required for work-related purposes, such as parking for off-site meetings. The monthly pre-tax limit for qualified parking expenses is $325 for 2025.

Ineligible Commuting Expenses

Several common commuting expenses are specifically excluded. These benefits are designed for mass transit and qualified parking, not for general personal vehicle costs. Expenses such as gasoline, vehicle maintenance, and car insurance are not eligible for pre-tax treatment.

Tolls incurred during a commute are also typically not covered, nor is vehicle depreciation. General taxi fares or rideshare services, such as Uber or Lyft, are usually ineligible unless they are part of a pre-approved, eligible vanpool or commuter highway vehicle arrangement. Additionally, costs associated with bicycle commuting, including the purchase or repair of a bicycle, are currently not eligible for pre-tax benefits. The exclusion extends to general personal vehicle expenses and travel not directly related to the daily commute, such as travel between different office locations or business travel.