Employees throughout the region are realizing the savings that can be had by utilizing Transit Benefits. Section 132(f) of the federal tax law allows for employees to have money deducted pre-tax (up to the monthly limit) from their paycheck to pay for their transit fares. By deducting these pre-tax, employees can save up to 40% through reduced taxes paid. Below is an example of how someone can save through the pre-tax deduction.
| Monthly Income Without Pre-Tax Benefit1 |
||
|---|---|---|
| Monthly Gross Salary | $4,000 | |
| Federal Taxes | ($1,120) | |
| FICA | ($306) | |
| State Tax | ($200) | |
| Post-Tax Income | $2,374 | |
| Transit Fare2 | ($300) | |
| After Tax & Transit | $2,074 | |
| Monthly Income With Pre-Tax Benefit1 |
||
|---|---|---|
| Monthly Gross Salary | $4,000 | |
| Transit Fare2 | ($300) | |
| Pre-Tax Income | $3,700 | |
| Federal Taxes | ($1,036) | |
| FICA | ($283) | |
| State Tax | ($185) | |
| After Tax & Transit | $2,196 | |
Savings of $122 each month | $122 x 12 months = $1,464 in Annual Savings
1) Assumes employee included in the 28% tax bracket, pays 5% state sales tax and 7.65% in FICA.
2) Assumes employee deducts the maximum each month.
How do I use transit benefit?
View our portfolio of products available for you to pay for your transit fares.
Getting Started
If you already commute on transit and aren’t enrolled in a transit benefit fare program, check with your employer to see if one is offered. If so, sign up! If your employer does not offer a transit benefit fare program, encourage your employer to enroll. You can send your employer an email containing a link to the RTA Transit Benefit Fare Program website.