How Pre-Tax Commuter Benefits Save You Money
A pre-tax commuter benefit lets you pay for eligible transit passes and vanpool costs with money deducted from your paycheck before federal income tax, Social Security, and Medicare taxes are applied — up to a monthly IRS limit. Because the deduction lowers your taxable income, the savings depend on your marginal tax rate rather than a flat percentage.
This calculator applies the pre-tax limit to your monthly transit spending and multiplies the eligible amount by your marginal tax rate to estimate how much you keep in your pocket each month and year. If your employer offers this benefit through payroll, enrolling costs nothing extra and simply redirects money you'd spend on transit anyway.
Frequently Asked Questions
It lets you pay for transit passes or vanpool costs with money deducted from your paycheck before taxes, up to a monthly IRS limit, lowering your taxable income.
Yes, the IRS sets an annual monthly limit for qualified transit benefits, adjusted periodically for inflation. Amounts above the limit aren't eligible for the pre-tax treatment.
No, it's optional for employers to offer. Some cities require larger employers to offer a pre-tax transit benefit, but it isn't universal nationwide.