&EPA
United States
Environmental Protection
Agency
Air and Radiation
EPA420-F-98-032
December 1998
Office of Mobile Sources
Environmental
Fact Sheet
Commuter Choice:
Information for Employees
Increase your income and your transportation options to and from work
while doing your share to reduce congestion and air pollution. Ask your
employer about Commuter Choice!
What is
Commuter
Choice?
Commuter Choice programs can provide employees with more ways to
get to work and more help in paying for it. Commuters also save money
on gas, oil, and tolls. Less time is wasted in traffic, and less wear and tear
extends the life of a car. Commuter Choice does not limit employees that
desire or need to continue driving.
Commuter Choice provides a framework for employers to offer their
employees transportation options in commuting to and from work, such
as:
• The ability to pay for commuting expenses with pre-tax income (thus
reducing your taxes!).
• Free or reduced cost passes for public transportation, such as subway
cards, bus tokens, or train tickets.
• Transit and vanpool vouchers for independent services.
• Services to facilitate carpooling and vanpooling such as providing
vans, ridematching, and a guaranteed ride home.
• Telecommuting options (so you can work at home more often).
• Proximate Commuting: a program that matches employees of multi-
site employers (such as banks or chain stores) to the branch office
nearest their home.
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• Incentives to bike or walk.
• Parking Cash Out: you can trade parking space for cash or other
benefits.
Saving Money
Employees can save money with Commuter Choice Programs in one of
three ways:
1. In Addition to Compensation/Additional Benefit
You may receive the benefit in addition to current wages. Specifically,
you can receive transit, vanpool, and parking benefits completely free of
all U.S. payroll and Federal income taxes. Your employer pays for the
benefit and receives a deduction from his Federal business income taxes
for the value of that benefit. The employer also does not pay payroll
related taxes or costs on the benefit.
2. In Lieu of Compensation/Pre-tax Benefit
Your employer may permit you to set aside some of your income, before
taxes, to pay for your commutes. You may use this pre-tax income to pay
for transit, vanpools, or parking. You would not pay Federal income
taxes or payroll taxes on the amount they elect to set aside for the com-
mute option, and your employer would not pay U.S. payroll taxes or
other payroll related costs since the amount is treated as a benefit rather
than as taxable salary.
3. Cost-Sharing
Your employer may share the cost of commuting to and from work with
you. They could do this through a combination of the two benefits.
Under the new tax law, employers can offer the specified benefits for
their employees' work commutes in addition to or in lieu of compen-
sation Federal-tax-free up to these limits:
• Up to $175 per month for parking at or near work site and transit
facilities
• Up to $65 per month for public transit
• Up to $65 per month for vanpool services
(For transit and vanpooling, this amount will increase to $100/month for
taxable years beginning after December 31, 2001.)
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Parking
Cash Out
Parking Cash Out allows employers who provide parking to offer you
the option of receiving cash, or-other qualified benefits, instead of a
parking space. You can keep the money and carpool or use it to pay for
other transportation. Or, you can choose to keep the Federal-tax-free
parking space. Only if an employee accepts the cash option is the benefit
taxable as income for that employee.
Proximate
Commuting
For multi-site work locations, such as banks and fast food chains, this
can be a very effective strategy. Many employees of multi-site busi-
nesses do not work in the branch closest to where they live. Proximate
commuting matches new and existing employees to work sites closer to
their homes and allows them to trade places.
Air Quality
and
Congestion
Free parking at work leads to more driving at times of the day when
most of us are already on the road. In addition to creating congestion,
emissions from tailpipes are a big contributor to urban smog. Addition-
ally, emissions from automobiles are a major source of greenhouse gases
that warm the atmosphere and contribute to the threat of climate change.
Commuter Choice programs help reduce air pollution and other negative
environmental effects from solo-driving.
Satisfaction
The experience of many participating employers in Commuter Choice
programs has been uniformly positive. Programs have achieved high
satisfaction fates from employers and are well appreciated by employ-
ees.
For More
Information
This document and additional information on transportation and air
quality are available electronically at the TRAQ Center on the EPA
Internet server at:
http://www.epa.gov/oms/traq
For a hard copy of this document, call the National Service Center for
Environmental Publications (NSCEP) at (800) 490-9198.
For more information, please contact:
Deanne Upson
US Environmental Protection Agency
Transportation Air Quality (TRAQ) Center
2000 Traverwood Dr.
Ann Arbor, MI 48105
phone: (734) 214-4283
fax: (734) 214-4052
e-mail: upson.deanne@epa.gov
Or call the TRAQ Center Information Request Line at:
(734) 214-4100
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