Public Transit and Shuttles

Subsidize Public Transit Passes for Employees

What Is It?

Employers may pay all or a portion of a commuting employee’s transit pass costs in order to incentivize employees to leave their cars at home. These subsidies can be applied to bus passes, subway passes, commuter rail passes, and other modes of transportation.

Benefits

Encouraging public transit can reduce an organization’s environmental impact because it can decrease the number of single occupancy vehicles commuting to a given workplace. Additionally, this practice could lead to cost-savings for the business because the need for additional parking will decrease as the number of carpooling vehicles increases. In particular, subsidizing mass transit passes can help employers realize tax savings (see Financing Options). 

Regulatory Impacts and Requirements

Section 7.16 of the 310 CMR 7.00: Air Pollution Control Regulations (the Massachusetts Rideshare Regulation) requires the following organizations to develop plans and set goals for reducing commuter drive-alone trips by 25%:

  • Businesses with 1,000 or more applicable commuters
  • Educational institutions with 1,000 or more applicable commuters
  • Businesses with 250 or more applicable commuters that are also subject to the Massachusetts Air Operating Permit Program (310 CMR 7.00, Appendix C)

(MassDEP)

Financing Options, Incentives, and Rebates

Employers can provide up to $105 per month in tax-free transit/vanpool benefits to employees. The employer does not pay payroll taxes on the benefit, and employees do not pay income or payroll taxes on it. As a result, giving an employee $105 in transit/vanpool benefits is less expensive for an employer than raising the employee’s salary by $105, and the employee takes more home. In addition, employers offering a transit subsidy of $30 per month per employee may be eligible for national recognition under the University of South Florida’s Best Workplaces for Commuters program.

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