Transit Benefit Fare Program
For the employer:
Would you like to order an employee benefit that costs little or nothing to provide?
For the employee:
Would you like to save money on your commuting costs?
Benefits
There is a benefit that can offer both. The RTA/CTA Transit Benefit Fare Program can:
Employer Benefits
- Provide tax savings for employers (up to 10% of what employees spend on transit)
- Is easily managed
- Can serve as a recruiting tool
- Improve morale and reduce absenteeism
- Increase productivity
- Have a positive environmental impact
Employee Benefits
- Provide tax savings for employees (up to 40% of their transit spend)
- Reduce employee commuting costs
- Reduce car costs (gas, wear and tear, insurance, etc.)
- Increase free time by taking public transportation
- Have a positive environmental impact
The RTA/CTA Transit Benefit Fare Program is an employee benefit program administered by employers. It allows employees to pay for their transit rides using pre-tax dollars – up to $230 per month ($2,760/year).
The program is based on a federal tax law designed to encourage the use of public transit. An amendment enacted under the Transportation Equity Act for the 21st Century (TEA-21) expanded the definition of the Qualified Transportation Fringe provision of the Internal Revenue Code, Section 132(f).
Because of the pretax nature of the program, savings for employees can be as much as 40 percent and employers can realize about a 10 percent payback.
Through this program the following products are available:
- CTA Chicago Card Plus: a Smartcard with an online account. It offers Pay-Per-Use or 30-Day Pass options and can be used on CTA or Pace.
- RTA FareChecks: a voucher system for riders of Metra, South Shore, van pools and certain Amtrak routes.
- Transit Cards: are magnetic paper cards in Pay-Per-Use or 30-Day Pass options. They can be used on CTA and Pace.
- Chicago Card Monthly Pass: a Smartcard that is a pass for a calendar month and can be used on CTA and Pace.
Chicago Card Plus and Chicago Card orders are placed every month. FareChecks and Transit Cards are ordered as needed.
A company can choose to offer all of the fare media products or only choose those items that work best for the company employee population.
Employers have the option of subsidizing employees' transit costs at a level of their choice or not at all. The outcome is a reduction of taxes for employees and employers, regardless of the level of subsidization by the employer.
Tax Advantages of Transit Benefit (yearly calculation).
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EMPLOYEE COSTS
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AMOUNT
|
|
Annual Transit Set-Aside*
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$2,760.00
|
|
Federal Income Tax Saved**
|
($772.80)
|
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Employee FICA 7.65% Saved
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($211.14)
|
|
State Income Tax Saved***
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($82.80)
|
|
TOTAL COST FOR $2,760 IN TRANSIT
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$1,693.26
|
|
TOTAL SAVINGS TO EMPLOYEE
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$1066.74
|
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EMPLOYER COSTS
|
AMOUNT
|
|
Employee Annual Transit Set-Aside*
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($2,760.00)
|
|
Employee’s Pre-Tax Salary Deduction
|
$2,760.00
|
|
Actual Cost to Employer
|
$0.00
|
|
Employer FICA 7.65% Saved
|
$211.14
|
|
Employer Unemployment Tax Saved****
|
$22.08
|
|
NET SAVINGS TO EMPLOYER
|
$233.22
|
*Assumes employee sets aside the maximum per month
** Assumes employee pays 28% in Federal Income Tax
*** Assume employee pays 3% in State Income Tax
****Assumes employer pays .8% in unemployment tax (FUTA)
For more information, download an Implementation Kit or call the Transit Benefit Hotline at 1-800-531-2828.