How Benefits Can Be Offered 1. An employee may receive the benefit in addition to their current wages. Specifically, they can receive transit, vanpool, and parking benefits completely free of all U.S. payroll and Federal income taxes up to specified limits. Neither the employer nor employee pays payroll taxes or other related payroll costs on the benefit.
Employee pays no payroll or income taxes on benefit.
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 since the amount is treated as a benefit rather than as taxable salary. An employer may share the cost of commuting to and from work with their employees. Tax breaks on benefits only apply directly to transit, vanpool and parking benefits.