SmartBenefits is Smart for Employers
Enroll in SmartBenefits to let your employees commute tax-free. Metro's SmartBenefits® program is free of charge.
No matter how you offer it, as a direct benefit or a pre-tax payroll deduction, SmartBenefits® is a powerful tool for helping employers recruit, retain, and motivate employees.
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Tax Advantage. For-profit employers cannot deduct qualified transportation fringe (commuter) benefits, but can avoid about 11% in payroll taxes. Non-profits can deduct the benefit expense and avoid the related payroll taxes. For employees, the commuter benefits are completely tax-free. See the charts below. |
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Qualify for Local Incentives. Maryland employers can save even more with Commuter Choice Maryland and the Montgomery County FareShare Program. |
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Comply with DC Law. DC employers with 20+ employees can use SmartBenefits® to comply with DC's commuter benefits law and avoid fines (see Section 3302). |
Tax Advantages and the Law
Using SmartBenefits®, employees can save nearly $1,800 in payroll and income taxes annually. Employers can avoid payroll taxes on the amount of SmartBenefits provided and qualify for local incentives.
This chart reflects the savings for a roundtrip from Glenmont to downtown DC for employees who work a five-day week and park at the Glenmont Metrorail lot.
| For Taxable Years Beginning in 2023 |
For-Profits, State and Local Govt | ||
|
Employee
SmartBenefits® Savings |
Transit Only
$300 / Month |
Parking Only
$104 / Month |
Transit & Park
$384 / Month |
| Annual Benefit or Payroll Deduction | $ 3,600 | $ 1,250 | $ 4,850 |
| Federal Income Tax 22.00% | (790) | (280) | (1,070) |
| FICA: Social Security 6.20% | (220) | (80) | (300) |
| FICA: Medicare 1.45% | (50) | (20) | (70) |
| State Income Tax 7.00% | (250) | (90) | (340) |
| EMPLOYEE TAX SAVINGS | $ (1,310) | $ (470) | $ (1,780) |
| Net Cost to Employee | $ 2,290 | $ 780 | $ 3,070 |
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Employer SmartBenefits®
Payroll Tax Reduction |
Transit Only
$300 / Month |
Parking Only
$104 / Month |
Transit & Park
$384 / Month |
| Annual Benefit or Payroll Deduction | $ 3,600 | $ 1,250 | $ 4,850 |
| FICA: Social Security Match 6.20% | (220) | (80) | (300) |
| FICA: Medicare Match 1.45% | (50) | (20) | (70) |
| Unemployment FUTA 0.60% | (20) | (10) | (30) |
| Unemployment SUTA 2.62% | (90) | (30) | (120) |
| EMPLOYER PAYROLL TAX REDUCTION | $ (380) | $ (140) | $ (520) |
Assuming a 21% corporate tax rate, a for-profit employer's net tax cost to offer the commuter benefit in the example would be $500. ($4,850 non-deductible qualified transportation benefit * 21% = $1020 less $520 in avoided payroll tax = $500.)
Non-profit employers enjoy the same tax advantages as for-profits, plus non-profits no longer have to pay unrelated business income tax on the benefits thanks to the 12/20/19 passage of H.R. 1865 (pg. 715). In other words, non-profits actually save money for each commuter benefit dollar.
For taxable years beginning in 2023, employers can generally exclude the value of transportation benefits that you provide to an employee from the employee's wages up to the following limits:
- $300 per month for combined commuter highway vehicle transportation and transit passes [including Metro's SmarTrip® cards].
- $300 per month for qualified parking. 1
Maryland employers may also qualify for additional tax savings under the Commuter Choice Maryland Benefits Program and Montgomery County's FareShare Program.
1 The Transportation (Commuting) Benefits section of IRS Publication 15-B describes the qualified transportation benefits that employers may offer under the Internal Revenue Code (26 U.S.C. Section 132(f)).
Qualified transportation benefits include providing a transit pass benefit. The definition of a transit pass includes smart cards like Metro's SmarTrip® card as described in
IRS Revenue Ruling 2014-32
.
As always, check with your tax advisor before making any tax decisions.
Considering a Third-Party Administrator?
- Third-party administrators charge a fee for their services. SmartBenefits® is fee-free.
- SmartBenefits® is managed locally by transit benefit experts.
- Some TPAs offer debit cards that let you transfer tax-advantaged funds directly to a SmarTrip® card. In that case, the funds for transit and parking are commingled. Consult your tax advisor before making a decision.
Get Started
Ready to open a SmartBenefits® employer account? Submit an application and an account representative will get in touch with you. Remember, Metro does not charge a fee to participate in SmartBenefits®, so there's no risk to apply.
Employees may participate only after their employer has enrolled in SmartBenefits®.
Have questions? Send an email to our SmartBenefits® account team or call us at 202-962-2784.
Employer Resources
SmartBenefits® Employer Brochure
New Employee Enrollment Info Card - Online
New Employee Enrollment Info Card - Manual with Parking Reference
New Employee Enrollment Info Card – Manual without Parking Reference