What Can You Use Commuter Benefits For?

Commuter benefits allow employees to use pre-tax income to cover qualified transportation costs associated with their commute to work. These employer-sponsored programs help reduce the financial burden of daily travel by decreasing taxable income.

Eligible Mass Transit and Vanpool Expenses

Commuter benefits can be applied to mass transit expenses, including fares for public transportation systems like bus, subway, train, and ferry services. Eligible forms of payment include passes, tokens, fare cards, or smart cards used for transit agency services.

Vanpooling costs are another eligible expense. For a vanpool to qualify, the vehicle must have a seating capacity of at least six adults, not including the driver. At least 80% of the vehicle’s mileage must be for transporting employees between their homes and workplace. At least half of the adult seating capacity, excluding the driver, must be occupied by employees during these trips. Standard taxi or typical ride-sharing services do not meet these vanpool criteria for pre-tax eligibility.

Eligible Parking Expenses

Qualified parking expenses are another eligible use for commuter benefits. This includes costs for parking a vehicle at or near your employer’s business premises. Parking is also eligible if it is at or near a location from which you commute to work by mass transit, vanpool, or carpool. Parking fees incurred at a train station or a park-and-ride lot qualify.

Eligible parking expenses cover various payment methods, such as monthly parking passes, daily fees, or coins used in parking meters. However, parking at an employee’s personal residence does not qualify for commuter benefits. The purpose of the parking must be directly related to the commute to or from work, or to access qualified public transportation.

Using Your Commuter Benefits and Key Considerations

Employees access their commuter benefits through methods such as pre-loaded debit cards, vouchers, or direct reimbursement for out-of-pocket expenses. Many programs issue a dedicated debit card for use at transit authorities or parking garages for eligible purchases. Funds contributed to these accounts generally roll over from month to month.

The Internal Revenue Service (IRS) sets monthly contribution limits for commuter benefits. For 2025, the monthly exclusion for both transit/vanpool expenses and qualified parking is $325 for each category. Employees can elect to participate in both transit and parking benefits, combining these amounts. Any expenses exceeding these monthly limits cannot be paid with pre-tax funds.

Several commuting costs are not eligible for pre-tax commuter benefits. These include expenses for gasoline, tolls, or car maintenance. Standard taxi services and typical ride-sharing services like Uber or Lyft do not qualify unless they meet the IRS definition of a vanpool. Additionally, expenses for bicycle commuting were previously eligible but are currently suspended as a tax-free benefit until 2026.