However, employers can offer incentive programs, such as taxable subsidies, for those who walk, bike, or ride in a carpool. For transit and vanpools, it is important to keep records proving expenditures such as transit pass invoices from the local provider. Employees can set aside some pre-tax income to pay for transit or eligible vanpools. Therefore, employees save on payroll and income taxes and employers reduce payroll costs. Employers save on payroll related taxes.
Employees save on federal income taxes.