Federal Tax Incentives for transit, vanpooling and bike commuting



What is Commuter Tax Benefit?

Commuter Tax Benefit is Connecticut's program to promote federal tax law allowing employees to set aside pre-tax income to pay for transit and vanpool fares. As of February 2009, employees may set aside up to $230 a month ($2760 a year) of their salaries before taxes to pay for transit and vanpool fares. An employee may also set aside up to $230 a month ($2760 a year) to pay for qualified parking expenses.

Can I get a tax break without my employer's participation?

No. The tax benefit is available only through an employer-sponsored commute benefit program.

What if my monthly fare is more than $230?

The $230 for transit/vanpools and $230 for qualified parking are caps - you may claim only up to these limits on a monthly basis. Your expenses above the caps will be paid with taxable income.

Is the program easy to set up?

Yes. There are no plan filings or forms for the employer to complete, no "use it or lose it" rules, no irrevocable elections, and no mandatory enrollment dates. It is not subject to the regulations governing cafeteria plans - and, in fact, cannot be offered as part of a cafeteria plan.