A transit benefit (also called a commuter transit account) is a pre-tax benefit that lets you pay for public transportation costs with tax-free dollars.
Eligible expenses
Your transit benefit can pay for:
Bus passes
Commuter rail
Ferry rides
Subway and train fares
Transit passes and stored-value cards
Vanpool expenses
Essentially, if it gets you to and from work via public transit, it likely qualifies.
Ineligible expenses
You cannot use your transit benefit for:
Parking expenses (use a parking benefit instead)
Personal vehicle expenses
Ride-sharing services like Uber or Lyft
Tolls or mileage
Reimbursement
Pay for eligible transit expenses out-of-pocket. Submit receipts for reimbursement.
Funding
Transit benefits are funded through pre-tax payroll deductions. You elect to contribute a certain amount from each paycheck, and those funds are deducted before taxes are calculated.
Limits
The IRS sets annual limits on transit benefit contributions. For 2025, you can contribute up to $325 per month ($3,900 annually) in pre-tax dollars for transit expenses.
Your employer determines the actual contribution amount within these limits.
Taxes
Transit benefit contributions are not subject to federal income tax, Social Security tax, or Medicare tax. This reduces your taxable income and saves you money.
For example, if you contribute $100 per month to your transit benefit, you could save approximately $25-30 in taxes depending on your tax bracket.
Ownership
Transit benefit funds are set aside for you from your paycheck. Funds typically operate on a monthly basis and you cannot spend beyond the monthly limit, though policies vary by employer. Check your specific plan details about fund rollover and forfeiture rules.
Other benefits
You can have both parking and transit benefits, but the amounts must reside in separate accounts. The IRS limits apply separately to each benefit type.