Commuter benefits are employer benefits that provide employees with funds to cover transportation expenses with pre-tax funds.
Transit and/or Parking
While the term "commuter benefit" is commonly used, commuter benefits frequently either cover transit costs (e.g., public transportation) or parking costs (you get it).
Common eligible expenses for transit
Varies by Employer
Eligible expenses vary by employer. We've listed common eligible expenses below, but it's important to verify your eligible expenses below. Learn how to do this here.
The Internal Revenue Service considers public transportation costs eligible for transit benefits. These costs are only eligible to the extent they are used by employees to get to and from work. Here are some examples:
Bus
Ferry
Monorail
Streetcar
Subway
Train
Vanpool expenses are eligible, but the highway vehicle must seat at least six adults, excluding the driver.
Common eligible expenses for parking
Varies by Employer
Eligible expenses vary by employer. We've listed common eligible expenses below, but it's important to verify your eligible expenses below. Learn how to do this here.
The Internal Revenue Service considers parking expenses eligible for a parking benefit. These costs are only eligible to the extent they are used by employees to get to and from work. This includes costs for parking:
At or near work
On or near mass transit premises (e.g., parking next to the bus stop)
Substantiation for eligible expenses
Any claim for a transit benefit must include a receipt for reimbursement.
Monthly contribution limits
The IRS sets monthly contribution limits for parking and transportation expenses, which are adjusted annually for inflation.
| Parking | Transportation |
2025 | $325 | $325 |
Both employers and employees can contribute to a commuter benefit, but their combined contributions cannot exceed the transportation or parking limit.
The limits for transportation and parking are separate. In 2025, an employee could contribute $325 monthly to both a transit and parking benefit for a monthly total of $650.
Tax savings
Like other pre-tax benefits (like a flexible spending arrangement (FSA)), commuter benefits provide tax savings. When employees contribute to their commuter benefit, their funds skip taxes like federal income, Medicare, and Social Security.