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Successful Commute Programs. Critical components include: An active and informed Employee Transportation Coordinator (you!) Guaranteed ride home Parking management Incentives or subsidies for non-drive alone commuting . What is a Commute Subsidy?.
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Successful Commute Programs Critical components include: • An active and informed Employee Transportation Coordinator (you!) • Guaranteed ride home • Parking management • Incentives or subsidies for non-drive alone commuting
What is a Commute Subsidy? • A financial benefit the employer provides on a regular basis, to individual employees – or employees who commute together - that directly lowers their costs of commuting. • free or discounted bus /rail/ferry /vanpool passes (transit subsidies) • cash or vouchers for commute expenses
Subsidy is the employer’s choice Amount and eligibility requirements of any subsidy are the employer’s decision. Considerations: • motivational value of subsidy - do you want it to change behavior or simply reward existing behavior? • budgetary constraints • Instrument to be used • tax implications
How can employers subsidize employee commutes? Bus, Rail - Share the cost of or give employees a transit pass or tickets; allow employees to use pre-tax income to purchase pass Vanpool - Share cost of or give employees a transit pass; discount or give parking; allow employees to use pre-tax income to pay fare Carpool - Give cash or other incentive; discount or give parking Bicycling & Walking - Give cash or other incentive, bicycle, walking shoes
What products can be used to subsidize transit? • PugetPass • FlexPass • Commuter Bonus Voucher
Annual transit pass Purchase for all employees Price is based on where company is located and estimated ridership. $4.75 face value = all zone fare Monthly, 3-month or annual transit pass Purchase as many or as few passes as needed for employees who use transit Price is based on transit trip length $1.75 - $4.75 face values determines trip length FlexPass – Puget Pass Comparison
Valid on regular Metro and Sound Transit bus service and Sounder Commuter Rail. 500 or more employees: options include Home Free Guarantee (HFG), vanpool, CT and PT. Less than 500 employees includes: $75/mo. Vanpool, $20/mo. Vanshare and HFG No ferry Valid on Metro Transit, Community Transit, Everett Transit, Pierce Transit, Sound Transit and Sounder Commuter Rail. No HFG No Vanpool No Vanshare Can include ferry FlexPass – Puget Pass Features Comparison
Order and distribute passes annually with user (employee) agreement Employer must subsidize 50 – 100% of the cost of each pass Annual Survey required for 500+ passes Order and distribute passes monthly to employees No requirement for employer subsidy FlexPass – Puget Pass Administrative Comparison
Commuter Bonus Voucher • Employers purchase Commuter Bonus vouchers from Metro in any whole dollar denomination ($10 min.) • Employees use vouchers to purchase the public transportation pass they want • One stop shopping for all Puget Sound transit agencies, vanpools, Washington State Ferries • Vouchers are good for 96 months and are renewable
What is ORCA ? One Regional Card for All • Community Transit • Everett Transit • King County Metro Transit • Kitsap Transit • Pierce Transit • Sound Transit • Washington State Ferries
What is ORCA Fare payment card using smart chip technology Tap at payment reader Seamless transfers Many revalue options
Business Account Options Two Categories Puget Pass, Commuter bonus vouchers ~~> Business Choice FlexPass ~~> Business Passport
When is ORCA Coming? Transition begins Spring 2009 Businesses will be contacted by their transit agency regarding conversion Businesses with annual agreements will be converted by their renewal date
Tax Implications of Commute Subsidies • How will a subsidy impact your employees’ taxable income? • How will a subsidy impact your company’s tax bill?
1. Employee Taxable Income • IRS views commute subsidies and incentives (provided by the employer to the employee) as “fringe benefits” • Fringe benefits are taxable income unless specifically excluded from income by law
1. Employee Taxable Income • IRS only excludes 3 types of commute fringe benefits from employee’s taxable income: • commuter vehicle (“vanpool”)- up to $120 per month per employee • a transit pass - up to $120/mo. • qualified parking - up to $230/mo. (2009)
1. Employee Pre-Tax Income • The IRS allows employers to allow employees to use up to $115 per month in pre-tax income to buy transit passes. • Reduces employee’s taxable income • Reduces FICA taxes paid by employee and employer • Employer is responsible for buying the pass with employee funds and for maintaining records of the transit expense
Qualified Bicycle Commuting Reimbursement – New in 2009! • A reimbursement of up to $20 per month for expenses incurred by the employee for the purchase of a bicycle and bicycle improvements, repair, or storage may be made by the employer on a tax-exempt basis. • A “qualified bicycle commuting month” is any month in which an employee: • regularly uses a bicycle for a substantial portion of the commute, and • does not receive any other qualified transportation benefit for vanpool, transit, and parking.
Qualified Bicycle Commuting Reimbursement – New in 2009! • The $20 amount is not indexed for inflation as are the other qualified transportation fringe benefits. • Unlike the other qualified transportation fringe benefits, a qualified bicycle commuting reimbursement benefit cannot be funded through employee pre-tax income.
2. Company’s Tax Bill • Credit on Washington State B&O or Utility taxes for subsidies paid to employees for: • public transit (bus, ferry, rail, vanpools) • carpooling • bicycling or walking to work • Credit = half amount paid to each employee; maximum $60 per employee per year
Up to $200,000 per employer per year Up to $2.75 million state-wide per year Apply through the Washington State Department of Revenue Must apply in January for previous year’s expenses 2. Company’s Tax Bill
The City of Seattle Employee Hours Tax or 'head tax' Taxes employers $25 for each employee working within the City of Seattle. The City bills employers for the tax in December with Business & Occupation taxes. Businesses may claim an exemption for each employee who commutes by non-drive alone modes 80% of the time. 2. Company’s Tax Bill