Article originally published on the Association for Commuter Transportation website on 11/3/25

🚗💸 Commuting shouldn’t drain your paycheck. But with rising gas prices, transit fares, and parking costs, it often does. What if there was a way to cut your costs before you even see them on your paycheck?

Enter IRS Section 132(f)—a little-known federal benefit that lets employees use pre-tax dollars to pay for public transit, vanpools, and parking. That means more money in your pocket and fewer headaches when it comes to getting to work.

How It Works

✅ Pre-Tax Payroll Deductions: You can set aside up to $315/month before taxes for transit or parking. That means you pay less in taxable income and keep more of what you earn.

✅ Vanpool Perks: If you ride in a qualified vanpool (6+ riders in a commuter vehicle), you can use pre-tax dollars to cover the cost. Employers can even subsidize the expense tax-free!

✅ Employer Savings: Businesses offering this benefit also save on payroll taxes, making it a win-win for both employees and employers.

How to Get Started

1️⃣ Talk to HR – Ask if your company offers pre-tax commuter benefits through providers like WageWorks, Edenred, or TransitChek.

2️⃣ Join a Vanpool – If you commute in a shared van, check with Enterprise Vanpool or your local transit agency to see if they qualify.

3️⃣ Start Saving! – Once enrolled, your transit or parking costs are deducted before taxes, lowering your taxable income and saving you up to 40% on commuting expenses.

Why Pay More When You Don’t Have To?

IRS Section 132(f) isn’t just a tax break, it’s a smart way to commute for less while reducing traffic congestion and emissions. If your company doesn’t offer it yet, start the conversation today. Your wallet (and the planet) will thank you! 🌍💰

In case you are not familiar:

IRS Section 132(f) is a federal rule that lets employees save money on their commute by using pre-tax dollars to pay for certain transportation costs : like bus passes, vanpools, and parking at work.

Here’s how it works:

• Normally, when you get paid, taxes are taken out first (like income tax and Social Security).

• But under this benefit, you can set aside up to $315 per month (as of 2025) from your paycheck before taxes to cover commuting costs.

• Because that money isn’t taxed, you save around 30–40% on your commute.

👉 Example:

If you spend $300 a month on parking or transit, you could save roughly $100+ a month just by paying for it pre-tax — that’s over $1,000 a year in savings.

It’s a win-win:

• Employees save money on commuting.

• Employers save on payroll taxes because that pre-tax money isn’t taxed on their side either.

In short:

💡 IRS 132(f) = A tax-free way to pay for your commute.

You keep more of your paycheck, and your employer saves too.