How Much Can Pretax Commuter Benefits Save You?
If your employer offers a commuter benefits program, you can set aside part of your paycheck before taxes to cover transit passes and parking, under Section 132(f) of the tax code. For 2025 each category — transit and parking — has its own $325 monthly limit, so an employee using both can shelter up to $650 a month from taxable income. Because the deduction happens before payroll taxes, it lowers not just federal income tax but also the 7.65% FICA tax for Social Security and Medicare, which is often overlooked.
How the Savings Are Calculated
| Category | Pretax Limit |
|---|---|
| Transit pass | $325/month ($3,900/year) |
| Qualified parking | $325/month ($3,900/year) |
| Tax savings | Annual pretax total × (marginal rate + 7.65%) |
Your savings are estimated by multiplying the amount you shelter by your federal marginal tax bracket plus the 7.65% FICA rate. The higher your income bracket, the more each pretax dollar is worth in avoided tax. Keep in mind this tool only estimates federal tax; state and local income tax rules on commuter benefits vary, and some employers cap total participation below the IRS limit, so check your plan's actual terms.
Frequently Asked Questions
Section 132(f) lets employees set aside pretax income for transit and parking, each capped at $325 per month for 2025.
Yes — it also reduces FICA tax (7.65%), which is why the savings are larger than an income-tax-only deduction.
The pretax amount is multiplied by your estimated marginal federal rate plus 7.65% FICA.
※ This is a federal-only reference estimate. Limits, state tax treatment, and employer plan rules can vary — confirm with your payroll provider.