Qualified Transportation Plans

What is a transportation plan?

A Qualified Transportation Plan is a voluntary plan that allows you to pay for your commuter and parking expenses with pre-tax dollars. 

Every pay period, you employer will deduct the amount you elect to contribute (up to a statutory limit) into your reimbursement account. You are eligible to be reimbursed for your commuting/parking expenses but only to the amount you have contributed (like a checking account which cannot be overdrawn). 

If you have not contributed enough, talk with your employer and increase your contribution.  If you are contributing more than your monthly commuting/parking expenses, talk with your employer and decrease your per pay period contribution. If you go on vacation and have no expenses, stop your contributions for that time period and start them up again when you return.

How does it benefit me?
  •  You don’t pay Federal, Social Security or Medicare taxes on bus, ferry, train, vanpool or parking (lots or meters) expenses.
What else do I need to know about transportation plans?
  •  Expenses that are not eligible for reimbursement are: vehicle fuel, bridge tolls, mileage, vehicle repairs, vehicle insurance, bicycle repairs.
  • You may receive a debit card that you can use to pay for eligible expenses.
  • If you work in the city of Seattle and your company has more than 20 employees, beginning 1/1/20, your company is required to offer you a transit benefit plan. Learn more here.

Frequently Asked Questions

I have a debit card for my transportation plan. How does it work?

Check with your employer to see if they offer a debit card to pay for qualified parking or transit expenses. If yes, the card will work only at transit and parking locations where the card machines are programmed with parking or transit merchant codes. Be sure to swipe the card for no more than you have in your parking or transit account(s). If you swipe the card for more than the balance in your card, or for more than the monthly statutory limit, the whole transaction will fail.

Can I increase or decrease my monthly contribution to a transportation plan according to my needs?

Yes, check with your employer to see how frequently they allow changes.

My employer contributes part of my transportation expense and I contribute the rest. How is the limit applied?

The combination of both employer and employee contributions to this benefit cannot be more than the monthly statutory limit.

What is the new Seattle City Transit Ordinance?

The City of Seattle has passed a Commuter Benefits Ordinance, which becomes effective on January 1, 2020. Businesses with 20 or more employees will be required to offer their employees the opportunity to make a monthly pre-tax payroll deduction for transit or vanpool expenses. The ordinance encourages commuters to use transit options other than single occupancy vehicles, thus reducing traffic congestion and carbon emissions. Because the deduction is pre-tax, the law has the added benefit of lowering the tax bills for both workers and businesses.


Official City of Seattle Links:

Ordinance Main Page

Q&A

Seattle Ordinance Code Link

I am taking a three-month maternity leave and must pay for parking in order to hold my parking space. Can I be reimbursed from my transportation plan for parking during my leave?

Yes, you are still considered to be an employee during the maternity leave. If you need to pay for parking to hold your spot until you come back; you are eligible for parking reimbursement.

Is a Qualified Transportation Plan a COBRA-eligible plan?

No. If there are any unused funds in the account, they are forfeited at termination of employment.

What type of employer can sponsor a Qualified Transportation Plan?

Any employer can sponsor a Qualified Transportation plan for its employees no matter what size. Eligible employers include corporations (Subchapter S or Subchapter C), partnerships, non-profit organizations, government entities, limited liability companies (LLCs) limited liability partnerships (LLPs) and sole proprietorships. (Caution: certain owners are ineligible to participate). Government employers can sponsor plans as can companies in the private sector.

I pay for a 3-month transit pass in advance. How does that work with the allocated monthly limit?

The value of the multi-month pass may be divided by the number of months for which it is valid for purposes of determining whether the monthly statutory limit has been exceeded.

What type of employee cannot participate in a transportation plan?

The following employees are excluded from participating in the plan: contract workers, independent contractors, temporary employees, former employees, individuals paid by an employment agency, collectively bargained employees, self-employed individuals, partners, and more-than-2% shareholders of a Subchapter S corporation.

What is the definition of “parking”?

If an employee commuting to work has parking expenses associated with that commute, those expenses can be paid by either the employer, the employee or a combination of both.

What are the limits to how much I can be reimbursed in each transportation account?

Each year, the IRS sets the limit for the calendar year limit. Click this link to see the maximum monthly limit for each benefit.

What types of benefits are available with a transportation plan?

Parking, transit passes and vanpooling (bicycle commuting reimbursements removed from eligibility in 2018). See more information here.

How are the monthly limits allocated month-to-month in a transportation plan?

The monthly expense must be calculated on a monthly basis.

Example #1: January’s ferry + bus combination = $280. In 2019 the statutory limit is $265. Only $265 can be reimbursed. The unpaid balance of $15 cannot carry over to a future month.

Example #2: January’s transit expenses are $170. July’s transit expenses are $280. July’s reimbursement is $265, the maximum monthly limit in this example. January’s smaller expense total has no bearing on reimbursing more than the maximum monthly limit in July.

Can I carry over amounts remaining in my transportation plan account to future months?

Yes, a plan may permit employees who remain employed by the employer to carry over unused amounts to subsequent months for an indefinite period, so long as the amounts are used solely for qualified transportation benefits (parking, transit passes and vanpooling). You cannot get your account balance back in cash.

What is the definition of “transit passes”?

“Transit pass” means any pass, token, farecard, voucher, or similar item that entitles a person to transportation on mass transit. There are different types of mass transit facilities – busy, ferry, rail, subway, monorail, streetcar, and tramcars, among others. Vanpool expenses may also have transit pass expenses if the vanpool is in the business of transporting persons for compensation or for hire and if the seating capacity of the vehicle is at least six adults (not including the driver).

Can an employer limit which employees participate in a transportation plan?

Employers cannot act arbitrarily and should administer it on a uniform and consistent basis. Employers do have considerable discretion to determine which employees will be allowed to participate. Participation could be limited to work location, full-time employees, to a group of employees that is disproportionately highly compensated, or even to employees selected on a discretionary, case-by-case basis.

What paperwork will I need to submit to substantiate my claims if I use a Qualified Transportation benefit debit card?

Receipts for transit pass purchases, monthly parking statements or invoices, parking meter’s which provide window tickets, vanpool statements or invoices are all eligible documentation for reimbursement along with the required claim form. When no receipt was provided, a personal attestation/certification regarding the type or amount of expense incurred is required (language included on Transit claim form).

I participate in a vanpool. How is my monthly vanpooling expense calculated for a transportation plan?

The fair market value of vanpooling expenses is based on all the facts and circumstances. Vanpooling benefits may be valued under the automobile lease valuation rule, the vehicle cents per mile rule or the commuting valuation rule. If one of these special valuation rules is used, however, the employer must use the same rule to value the use of the commuter highway vehicle by each employee who shares the use.

What type of employee can participate in a transportation plan?

Only individuals who are “currently employees at the time the Qualified Transportation plan is provided” are eligible to participate. The term “employee” includes only common-law employees (receiving W-2), other statutory employees (such as officers of corporations), and leased employees.