United States
Environmental Protection
Agency
Air and Radiation
EPA420-F-98-G35
September 1998
Office of Mobile Sources
vvEPA TRAQ Technical Brief
Transportation Air Quality Center
Commuter Choice: Guidance Overview
Commuter Choice is an important strategy to reduce emissions from
passenger vehicles and improve air quality. Through Commuter Choice
programs, employers offer one or more options from a diverse menu of
commute benefits encouraging employees to commute by modes which
are less polluting than driving alone. In addition, Commuter Choice
programs can improve public transit systems and potentially reduce
congestion. This technical brief, an introduction to the document SIP
Development Guidance: Using Emission Reductions from Commuter
Choice Programs to Meet Clean Air Act Requirements, is the first in a
series of technical briefs providing information on Commuter Choice
resources. The Guidance itself directs State and local governments to the
available tools and necessary requirements for including Commuter
Choice programs in State Implementation Plans (SIPs).
) Printed on Recycled Paper
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Significance
Since 1970, the amount people drive annually has more than doubled, and
more people are driving. Employee commute trips to work make up ap^
proximately 28% of the vehicle miles traveled (VMT) on our roads today.
The problem is that emissions from growing VMT and congestion threaten
to offset and, in some areas, overwhelm the air quality benefits of today's
cleaner cars and/or fuels. Auto emissions contribute heavily to air pollution
and to increased greenhouse gases in the atmosphere. Both pose recognized
risks to the environment and to people.
Since Commuter Choice programs can reduce VMT, auto emissions and' "
greenhouse gases, they can improve public health and contribute to Climate
Change efforts. Commuter Choice can be an essential tool used by State
and local air quality planning authorities to address transportation issues
and air pollution concerns. The programs can be developed by an individual
company or as part of a wider regional strategy.
Commuter Choice programs can help regions meet Clean Air Act goals.
Emissions reductions generated through Commuter Choice programs may
be included in SIPs for any criteria pollutant (e.g., ozone, participate matter)
in both nonattainment and maintenance areas. EPA is prepared to approve
emission reductions in SIPs that may be used to meet Reasonable Further
Progress (RFP) requirements, baseline determinations, redesignation, and
maintenance demonstrations. EPA's Office of Mobile Sources (OMS) has
issued a guidance document to assist State and local governments and
agencies in calculating the emissions benefits of Commuter Choice pro-
grams in SIPs. OMS will provide technical guidance and
assistance on SIP submittals, quantification expertise, outreach workshops,
and location of funding information.
How
Commuter
Choice
Programs
Work
Reducing the frequency that commuters drive alone generates air quality
benefits. Commuter Choice refers to a State- or agency-run program,
including public-private partnerships. Such a program could be required by
law, initiated by employers, or be entirely voluntary. The programs may
include one, all, or a combination of the following individual benefits:
• Free or reduced cost passes for public transportation (such as subway
cards, bus tokens, or train tickets),
• Transit and vanpool vouchers and subsidies,
• Services to facilitate vanpools and carpools (such as providing vans,
ridematching, and guaranteed ride home services),
• Park and Ride subsidies,
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• Telecommuting options (so employees 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,
• Incentives to bike and walk, and
• Parking Cash Out: employees can trade employer-paid parking space
for cash or other benefits.
With more options, commuters can be expected to use single-occupant
vehicles less often. When Commuter Choice is exercised, air quality im-
proves due to the mode shifts which should reduce VMT, and thus emis-
sions.
Benefits of
Tax Code
Changes
Federal tax benefits and cost savings can motivate employers to offer more
commute benefits for working people. Recognizing the air quality benefits
of VMT reduction, Congress has established tax incentives giving employ-
ers and employees new ways to get tax savings in association with specified
work commute benefits. These provisions, amended by the Transportation
Equity Act for the 21st Century (title 9 section 910, PL 105-178), are
contained in the Internal Revenue Code Section 132(f). The new tax law
provides direct benefits for transit, vanpooling, and parking.
Under current law, qualified parking, transit and vanpool benefits offered by
employers are not subject to certain Federal taxes (up to specified limits).
Employers may also offer Parking Cash Out, where employees can trade
employer-paid parking spaces for cash or other qualified benefits. If the
employee elects the cash option, it is taxable for that employee.
More specifically—
The New Tax Laws Mean:
Employees can receive the specified benefits for their work commutes in
addition to or in lieu of compensation (or a combination of) up to these
Federal limits: *
• Up to $175 for parking at or near work site and transit facilities (Fed-
eral tax-free)
Up to $65 for public transit (Federal tax-free)
• Up to $65 for vanpool services (Federal tax-free)
(For transit and vanpooling, this amount will increase to $100/month for
taxable years beginning after December 31,2001.)
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Note: Tax breaks on benefits only apply directly to transit, vanpool and
parking benefits. It is important to understand that the more options that are
available, the more employees will utilize the benefit, and the more tax
savings will be realized by the company. Additionally, companies should
understand that the cash option from Parking Cash Out and other monetary
incentives (e.g., transportation subsidies excluding subsidized parking,
transit, vanpools) are taxable for that employee. Further, the company must
pay payroll taxes for that employee related to the cashed out parking spot.
Subsidized parking and other transportation benefits do not become taxable
if an employer offers them along with the parking cash out option. Although
the tax laws do not specifically relate to benefits like telecommuting,
carpooling, biking, walking, and other commute options, employers can
always offer or encourage these choices. One way to provide an incentive
for these options is through Parking Cash Out, where an employee can
choose the cash benefit and commute by these alternative modes.
* Any amount of benefit in excess of the federal limits will be subj ect to
Federal income and payroll taxes. In addition, States may apply taxes even
when the Federal government does not.
How
Commute
Benefits are
Offered
Employers can offer the benefits in several different ways:
1. Additional Benefit/ In Addition to Compensation
An employee may receive the benefit in addition to their current wages.
Specifically, they can receive transit, vanpool, and parking benefits com-
pletely free of all U.S. payroll and Federal income taxes up to specified
limits. The employer pays for the benefit and receives a deduction from its
Federal business income taxes for the value of the benefit. Neither the
employer nor employee pays payroll taxes or other related payroll costs on
the benefit.
2. Pre-Tax Benefit / In Lieu of Compensation
An employer may permit employees to set aside some of their income,
before Federal taxes, to pay for qualified commutes. Employees may use
this pre-tax income to pay for transit, vanpools, or parking. Employees
would not pay Federal income taxes or payroll taxes on the amount they
elect to set aside for the commute option, and employers 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.
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3. Cost-Sharing
An employer may share the cost of commuting to and from work with their
employees. They could do this through a combination of numbers (1) and
(2) above.
Enhancing
Downtown
Parking
Commuter Choice can free up parking now used by downtown employees
for other uses, making downtowns more attractive business locations. In
addition, Commuter Choice can give a shot in the arm to urban transit
agencies whose services now compete with free parking to commuters.
Cities using the program effectively can experience increased demand for
alternative modes of transportation and increased efficiency, both aiding
urban revitalization and climate change efforts. Commuter Choice can help
revive downtowns as areas of transportation alternatives and multiple uses,
rather than areas of gridlock.
Raising Tax
Revenue
In a study of eight California employers who implemented Commuter
Choice programs—namely Parking Cash Out—it was found that the tax
base was increased. State and federal tax revenues from the employers
increased by $48 annually for each employee electing the taxable cash
option.
The
Guidance
Document
The document, SIP Development Guidance: Using Emission Reductions
from Commuter Choice Programs to Meet Clean Air Act Requirements, is
the first in a series of documents that provide resources relating to Com-
muter Choice programs. This document includes the following information:
• Describes the range of measures that are included under the Commuter
Choice umbrella
• Summarizes the analytical details for quantifying the emissions reduc-
tions from Commuter Choice programs, including a basic four-step
methodology.
• Reviews legal and administrative requirements for using the emissions
reductions in SIPs.
Estimating Emissions Reductions
The guidance provides a four-step methodology for developing protocols
used to project emission reductions from Commuter Choice programs,
summarized below:
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Four-Step Methodology
Stepl
Step 2
Step 3a
StepSb
Step 4
Population of Commute Vehicles
Estimate the relevant population of vehicles driven to work
Potentially Affected Population
Estimate the proportion of these vehicles driven to employer worksites
where Commuter Choice options are or will be available
Participation Rates
Forecast the typical effectiveness of a commute benefit options program
Uncertainty
Incorporate compliance and programmatic uncertainty factors
Emission Reductions
Estimate the total change in VMT and associated emission changes
For Further 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 technical brief or the
full document SIP Development Guidance:
Using Emission Reductions from Commuter
Choice Programs to Meet Clean Air Act
Requirements, please call the TRAQ Center
Information Request Line at (734) 214-4100.
EPA Staff Contacts
QMS Headquarters Contact:
Deanne Upson
U.S. Environmental Protection Agency
Office of Mobile Sources
2000 Traverwood
Ann Arbor, MI 48105
Phone: (734) 214-4283
Fax: (734) 214-4052
e-mail: upson.deanne@epa.gov
If not available, call the TRAQ Center at:
(734)214-4100
EPA Regional Contacts:
Region 1
JeffButensky
Air Quality Planning Unit
Office of Ecosystem Protection
JFK Federal Building
Boston, MA 02203
Phone: (617) 565-3583
Fax: (617) 565-4940
e-mail: butensky.jeff@epagov
Region 2
Linda Kareff
Air Programs Branch
Environmental Planning and Protection Division
290 Broadway, 25th Floor
New York, NY 10007-1866
Phone: (212) 637-3741
Fax: (212) 637-3901
e-mail: kareff.linda@epa.gov
Air Program Main Phone: (212) 637-4249
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Region 3
Paul T. Wentworth / Larry Budney
Energy, Radiation, and Indoor Environment
Division
1650 Arch St.
Philadelphia, PA 19103
Phone (Wentworth): 215-814-2183 Phone
(Budney): 215-814-2184
Fax (Wentworth): 215-814-2124 Fax
(Budney): 215-814-2134
e-mail: wentworth.paul@epa.gov;
budney.larry@epa.gov
Main phone number: 215-814-2100
Region 4
Alan Powell
Pesticides and Toxics Management Division
Regulatory Planning Section
61 Forsyth St., SW
Atlanta, GA 30303
Phone: (404) 562-9045
Fax: (404) 562-9068
e-mail: powell.alan@epa.gov
Pesticides Division Main Phone: (404) 562-
9077
Region 5
Patricia Morris
Air and Radiation Division
77 W.Jackson Blvd.
Chicago, IL 60604-3590
Phone:(312)353-8656
Fax: (312) 886-5824
e-mail: morris.patricia@epa.gov
Main Phone Number: (312) 353-2211
Region 6
J. Behnam (6PDL)
Air Planning Section
Multimedia Planning and Permitting Division
1445 Ross Avenue
Dallas, TX 75202
Phone: (214) 665-7247
Fax: (214) 665-7263
e-mail: behnam.jahanbakhsh@epa.gov
Main Phone Number: (214) 665-7214
Region 7
Christopher D. Hess
Air Planning and Development Branch
Air, RCRA and Toxics Division
726 Minnesota Avenue
Kansas City, KS 66101
Phone:(913)551-7213
Fax:(913)551-7844
e-mail: hess.christopher@epamail.epa.gov
Main Phone Number: (913) 551-7020
Region 8
Jeff Houk (8P2-A)
Air Program
999 18th Street, Suite 500
Denver, CO 80202
Phone: (303) 312-6446
Fax: (303) 312-6064
e-mail: houk.jefT@epa.gov
Air Program Main Phone: (303) 312-6470
Region 9
Mark Brucker (AIR 2)
75 Hawthorne St.
San Francisco, CA 94105
Phone:(415)744-1231
Fax: (415) 744-1076
e-mail: brucker.mark@epa.gov
Air Division Main Phone: (415) 744-1264
Region 10
Wayne Elson (OAQ-107)
U.S. EPA
Office of Air Quality
1200 6th Ave.
Seattle, WA 98101
Phone: (206) 553-1463
Fax:(206)553-0110
e-mail: elson.wayne@epa.gov
Main Phone Number: (206) 553-0218
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