According to recent census data, there are over 1.9 million people in New Jersey who commute to work each day. Between mass transit fares, parking rates, and rideshare charges, commuters can end up forfeiting a good chunk of their paycheck just to get to work every day.
New Jersey government has stepped in to ease this pain point with new legislation.
What is the law?
On March 1st, Governor Phil Murphy signed bill S1567 into law. This bill requires that employers of 20 employees or more (with the exception of those currently in a collective bargaining agreement) offer a pre-tax transportation benefit.
“Many residents of New Jersey use mass transit or other forms of transportation to commute daily to and from work,” said Governor Murphy, “Providing this pre-tax benefit to commuters throughout our state will reduce the financial burden of fares and parking costs, resulting in significant savings. By signing this bill, my Administration is taking another step toward creating the fairer and more customer-friendly transportation system our commuters deserve.”
How do employees benefit?
Commuter benefits programs let employees set a side a predetermined amount of each paycheck towards commuting expenses, without being taxed on that income. Employees can use these funds on commuting expenses like transit fares, park and ride parking, and more. This benefits employees in two ways: they are better prepared for their monthly commuting costs and can budget their take home pay more efficiently, and they save money in the long-run since less of their income is taxed.
How do employers benefit?
Employers also experience multifaceted benefits from commuter benefit programs. Employers can see a drastic reduction in payroll expenses because of the drop in taxable income. Therefore, the more employees that enroll, the more an employer can save.
Are commuter benefits programs successful?
Commuter benefits programs are a win-win way to make commuting more affordable for employees. It improves employees’ access to transit and puts hard-earned money back in their pockets. Further, they encourage the use of mass transit and carpool options for commuting, which takes cars off the road and reduces pollution.
How will this legislation affect my organization?
Hundreds of New Jersey companies already offer commuter benefits. For those that do not and have 20+ employees on their staff, this tax saving benefit will be a requirement moving forward.
How can I offer this benefit?
There are already existing programs that you can offer to either your clients or your employees. The Clarity Smart Ride commuter benefits program is an example of a program that can save employees up to 30% on commuting costs and save employers up to 7.65% on every dollar contributed to the plan.
We offer a solution that is cloud-based, mobile-friendly, and convenient. Easy enrollment and unparalleled customer service will ensure that anybody in need of a commuter benefits program will find what they need with Clarity.
To find out more about staying compliant, contact us today.
Sources:
https://www.nj.com/data/2018/04/explore_the_ebb_and_flow_of_new_jersey_commutes_wi_1.html
