Commuter benefits have evolved beyond just bus passes and parking permits. Today’s workforce uses a mix of transportation, including public transit, carpools, bikes, scooters, and more. With all of these options, employers must find new ways to support these varied needs.
A key part of that support comes from understanding the difference between pre-tax and post-tax commuter benefits, and how combining them can create a more inclusive, flexible program.
The IRS allows employees to set aside pre-tax dollars for specific commuting costs, lowering taxable income for employees and reducing payroll taxes for employers.
For 2025, employees can exclude from taxable income up to:
Eligible expenses include:
Because these benefits directly reduce taxable income, they’re often the first choice for employers looking to maximize financial impact. But they’re not the only option.
Some commuting options, like e-bikes, don’t currently qualify for pre-tax treatment under IRS rules. That means any subsidy for these options is considered taxable income.
While that might sound like a drawback, the after-tax value can still be significant, especially for low-cost, high-impact benefits. For instance, Ridepanda’s subscription model starts at $50/month, giving employees access to their own $2,500+ e-bike, full maintenance, theft protection, and the option to swap or cancel anytime. Even after taxes, employees save compared to purchasing and maintaining their own bike. Plus this is something that they can use outside of work too, giving them an even more useful benefit.
Post-tax benefits can also fill important gaps:
Offering both pre-tax and post-tax options ensures employees have the freedom to choose the mode of transportation that works best for them.
A combined program might look like this:
When both options are available, participation rates tend to rise because the program feels more inclusive. Employers also see benefits in employee satisfaction, retention, and progress toward transportation demand management (TDM) goals.
Tracking program data helps employers understand impact and optimize offerings. Metrics might include:
With this data, companies can demonstrate tangible progress toward environmental commitments and employee engagement objectives.
In summary: Pre-tax benefits offer clear financial savings, while post-tax benefits expand access to sustainable, flexible options like e-bikes. The most effective commuter programs embrace both, creating a well-rounded offering that meets the needs of today’s diverse workforce.
