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California to Give Commuters Tax-Free Transit Benefits

| September 27, 2016

California to Give CommutersTax-Free Transit Benefits

California’s Governor has signed into law SB 1128, making permanent a pilot that provides employees in the Bay Area with tax-free transit benefits.

Here’s how it works: Under the program, employers in the Bay Area with at least 50 full-time employees must provide their workers with the option of tax-free transit and vanpool benefits.

The legislation defines a “full-time employee” as one who performed an average of at least 30 hours of work per week during the previous calendar month. The number of full-time employees is the average number of full-time employees per week, on payroll, during the most recent 3-month period.

Transit benefits stem from a Federal law which allows employees to be provided, or withhold, up to $255/month for transit or vanpool expenses so long those funds are provided or withheld by employer. Employers that do not currently have a commuter benefit program in place will be pleasantly surprised at how easy this benefit is to provide to employees. There are no required plan documents and no defined open enrollment periods. By offering commuter benefits, employers can save up to 7.65% on average in payroll taxes, and employees can save up to 40% on their commuting costs by using pre-tax money.

The pilot program was designed to expand commuting options to those in the Bay Area.

Meltem Korkmazel, COO of Edenred Commuter Benefit Solutions, states: “The results of the pilot were incredible and now that this pilot has been made permanent, the results will become more and more visible: Higher transit and vanpool participation, less roadway congestion and cleaner air.”


Category: Mass Transit

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