Direct Payments

The employer can deduct the cost of any direct payments towards employee vanpool costs as a business expense, saving on federal and state taxes.

Pre-Tax Deductions 

Your company can also deduct up to $130 per month for vanpooling costs from employee paychecks before taxes. As a result, your company saves on payroll taxes and your employees don't pay income taxes on those costs.

Providing benefits in lieu of salary will not increase costs to employers; it will reduce their payroll costs since payroll taxes do not apply to these benefits. Pre-tax payroll deductions are referenced in IRC Section 132(f), as amended by TEA-21, Title IX, Section 910. Also check with your tax advisor.

Commuter Choice Toolkit: Federal Transit Administration guide to assist employers with establishing a qualified fringe benefit commuting program for vanpools.

Federal Employees

All federal employees are eligible for transit/vanpool benefits now. They have to get a form from their HR office and they can receive up to $245 a month to use for transit passes or vanpool fares.