Does New York City have a transit benefit mandate for employers?
Yes. Since January 1, 2016, when New York City’s Commuter Benefit Law went into effect, many NYC employers are required to provide their employees with the opportunity to participate in the federal commuter tax benefit program when they commute by transit or vanpools. Under this law, employees can use up to $325 of their salary before taxes (pre-tax) each month to pay for these expenses.
Who is affected by NYC’s Commuter Benefit Law?
NYC’s Commuter Benefit Law applies to employers who:
- Have 20 or more non-union employees who each work more than 30 hours a week
- Are based in New York City
- Are for-profit or nonprofit entities, including temporary help firms.
Read the NYC Consumer and Worker Protection overview.
What is required of employers to comply with NYC’s Commuter Benefits Law?
Employers must offer full-time employees the opportunity to set aside pre-tax income for use on qualified transit or vanpool expenses. The federal government sets a limit each year for how much employees can set aside for pre-tax transit expenses, and in 2025 that limit is $325 per month.
Employers must also keep records that demonstrate that each eligible employee was offered the opportunity to use pre-tax income for transit or vanpool expenses. Employers must maintain these records electronically. The City provides an online compliance form for this purpose.
What transit benefits do NYC employees most want?
Employers can only spend their pre-tax funds on qualified transit or vanpooling expenses. In New York, most employees use their pre-tax funds on:
- New York City regional mass transit services, including Metropolitan Transportation Authority (MTA) subway and buses; Long Island Rail Road; Metro-North Railroad, New Jersey Transit, Port Authority Trans-Hudson (PATH) and Amtrak.
- Eligible ferry and water taxi services.
- Eligible vanpool services.
- Eligible commuter bus services.
- Access-A-Ride and other area paratransit providers.
Through OMNY, MTA riders can tap their personal bank card to ride the subway and buses. Many employees prefer to access their pre-tax transit funds on a benefits card, especially if it’s available in a mobile wallet for quick, contactless boarding.
MTA riders have several ways to pay for their transit expenses. NYC's fare payment system, OMNY, lets riders use contactless credit and debit cards to ride the subway and buses. Jawnt Pass is a contactless commuter debit card that provides employees with a way to use their pre-tax funds to pay for their transit expenses with OMNY. This card can also be added to Apple Wallet or Google Pay for quick, contactless boarding.
Why are commuter benefits good for employers?
- Employers save on FICA taxes (7.65%) on the amount that their employees set aside on a pre-tax basis to pay for their transit or vanpool expenses. For every $100 an employee sets aside to pay to ride the subway each month, the employer saves $7.65, or $91.80, per year. For many employers, this can provide substantial savings annually.
- Pre-tax benefits make employers more competitive for top talent.
- Commuter benefits make employers more willing to embrace return-to-office mandates.
- Incentivizing transit usage reduces demand for parking, which can be expensive for employers to provide.
- Pre-tax transit benefits are a relatively low cost, high impact, and demonstrable commitment to carbon reduction and environmental sustainability. Jawnt can help you measure and report the carbon your organization is saving by supporting transit.
Want to learn more?
Jawnt’s team of transit planners and benefit administrators are available to help you understand your options, requirements, and find a solution that will satisfy employers and employees alike. Drop us a line today to get started.
