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Commuter Benefit Tax Savings Calculator

Please note: The calculator works best in Google Chrome browser.

 

Commuter Benefit Tax Savings Calculator

Employer Paid Benefit

Pre-Tax Benefit

Note that employer and employee tax savings depend on average employee wages and tax rates. These calculations make general assumptions to provide a sense of potential benefits.

Employers have found that by including commuter benefit options to their employees that they were able to save money for their company, attract and retain top employee talent, and help reduce commuter stress.

Three options available to all Maryland employers can have valuable benefits:

Option 1a: Employer- Provided Transit Benefit:

Employers who cover the cost of a transit pass for their employees are eligible for commuter benefits (Transportation Fringe Benefits), which covers up to 50% of the cost ( up to $50 per month per employee). That means a $72 monthly transit pass would cost the employer only $36! This benefit can also be applied towards the cost of vanpool use.

Option 1b: Employee Pre-tax :

Employers who allow employees to set aside income on a pre-tax basis for transit, can save up to 7.65% on payroll taxes. Employees also save money on income ans payroll taxes-often a savings of about 25% (depending on tax rates).

  • Example: An employee purchases a transit pass using a pre-tax salary deduction.
  • For an employee who takes transit to work with an approximate cost of $140 per month, pre-tax benefits result in savings of $59.55 a month

Option 1c: Combination Employer-Paid and Employee Pre-tax Benefit:

The employer can contribute a portion of the cost of transit and let the employee pay for the remainder with pre-tax income.

  • Example: An employer offers a limited transit subisdy while also allowing for use of the pre-tax benefit.
  • For an employee who spends $200 per month on transit commuting costs, with a $100 subsidy and $100 pre-tax salary deduction the net cost to the employee is $70.23

 

MARYLAND COMMUTER TAX CREDIT

 

 


Contact: 410.865.1100 • Commuterchoice@mdot.maryland.gov