Complete 2026 guide to commuter benefit mandates and tax incentives across the US. Learn which cities require commuter benefits, employee thresholds, penalties, and compliance requirements.
Are you wondering if your company is required to offer commuter benefits? With more cities and states implementing commuter benefit mandates—and others offering valuable tax incentives—navigating compliance can be complex. This comprehensive guide breaks down every commuter benefit mandate and incentive program in the United States, helping you understand your obligations and opportunities.
Commuter benefits are employer-provided programs that help employees save money on their work-related transportation expenses. These programs typically allow employees to use pre-tax dollars for qualified commuting expenses including:
How much can employees save? By using pre-tax dollars, employees typically save 30-40% on their commuting costs, depending on their tax bracket.
How do employers benefit? Employers save an average of 7.65% on payroll taxes for each participating employee, reduce turnover, and demonstrate commitment to sustainability.
While there's no federal mandate requiring employers to offer commuter benefits, Section 132(f) of the IRS Code allows employers nationwide to provide tax-free Qualified Transportation Fringe (QTF) benefits.
For 2026, the monthly pre-tax limits are:
These limits are adjusted annually for inflation by the IRS.
Even if your city or state doesn't mandate commuter benefits, offering them through Section 132(f) provides significant tax advantages for both employers and employees.
Not sure if you need to comply? Check your compliance risk with our free calculator →
The following jurisdictions require employers to offer commuter benefits. Requirements vary by location, including different employee thresholds and specific compliance obligations.
Coverage: Nine-county regional mandate covering Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, southwestern Solano, and southern Sonoma counties.
Who must comply:
What's required: Employers must offer at least one of the following:
*Note: This $75 minimum is set by the Bay Area mandate and is separate from the federal IRS limit of $340/month
Penalties: $1,000 to $10,000 per day for non-compliance
Additional requirements:
Learn more: Bay Area Commuter Benefits Mandate →
Coverage: City of Philadelphia
Who must comply:
What's required: Offer one or more:
Effective date: December 31, 2022
Penalties: $100-$150 for initial violations; $150-$300 per day for repeat offenses
Learn more: Philadelphia Commuter Benefits Mandate →
Coverage: Los Angeles metropolitan area
Who must comply:
What's required: Provide pre-tax commuter benefit options for transit and vanpool expenses
Penalties: Determined case-by-case; can be substantial for larger employers
Learn more: Los Angeles Commuter Benefits Mandate →
Coverage: 38 counties and townships in the Chicago metro area within the six-county RTA region, including Cook, DuPage, Kane, Lake, McHenry, and Will counties
Who must comply:
What's required: Pre-tax transit benefits (Section 132(f))
Effective date: January 1, 2024 (Transportation Benefits Program Act - HB2068)
New hire eligibility: After four months of employment
Penalties: Case-by-case assessment
Note: This is one of the most expansive state-level mandates, covering much of Illinois, not just Chicago proper.
Learn more: Illinois Commuter Benefits Mandate →
Coverage: All five boroughs (Manhattan, Brooklyn, Queens, The Bronx, Staten Island)
Who must comply:
What's required: Pre-tax transit benefits for:
Effective date: January 1, 2016
Enforcement: NYC Department of Consumer and Worker Protection
Penalties: Up to $250 per violation
Key difference: Unlike some mandates, NYC requires offering benefits proactively, not just upon employee request.
Learn more: New York City Commuter Benefits Mandate →
Coverage: Entire state of New Jersey
Who must comply:
What's required: Pre-tax transportation fringe benefits per Section 132(f)
Effective date: March 1, 2020
Penalties: Up to $3,000 in the first year; escalating fines for repeat offenses ($500+ every 30 days)
Notable quote: Senator Loretta Weinberg during signing: "Commuting costs, for the most part, are a predictable expense. If you asked someone how much they spend on their commute each month, most people could give a quick estimate off the top of their head."
Learn more: New Jersey Commuter Benefits Mandate →
Coverage: City of Seattle
Who must comply:
What's required: Pre-tax commuter benefits for transit and vanpool expenses
Effective date: 2020 (Seattle Commuter Benefits Ordinance)
Penalties: Up to $3,000 in the first year; $500 every 30 days for repeat offenses
Learn more: Seattle Commuter Benefits Mandate →
Coverage: District of Columbia
Who must comply:
What's required: Pre-tax commuter benefits per Section 132(f)
Effective date: 2019
Penalties: Up to $6,000 in the first year; escalating to $800 per employee for repeat offenses
Learn more: Washington D.C. Commuter Benefits Mandate →
Coverage: City and County of San Francisco
Who must comply:
What's required: Same options as Bay Area mandate (pre-tax benefits, subsidies, or employer-provided transportation)
Note: This is a city-specific requirement that applies on top of the broader Bay Area mandate, with a lower employee threshold.
Learn more: San Francisco Commuter Benefits →
Coverage: City of Berkeley
Who must comply:
What's required: Pre-tax commuter benefits and/or employer subsidies
Note: One of the lowest employee thresholds in the country, reflecting Berkeley's strong sustainability initiatives.
Learn more: Berkeley Commuter Benefits Mandate →
Coverage: City of Richmond
Who must comply:
What's required: One of the following:
Note: Richmond's mandate is comprehensive, covering not just full-time but also part-time and contract workers.
Learn more: Richmond Requirements →
Coverage: Portland Air Quality Maintenance Area (AQMA), including portions of Multnomah, Washington, and Clackamas Counties
Who must comply:
What's required:
Unique aspect: Unlike other mandates that simply require offering benefits, Oregon's ECO Program requires measurable results in reducing single-occupancy vehicle trips.
Available benefits:
Penalties: Civil penalties for failure to register, non-submission of surveys/plans, or failure to implement approved strategies. However, employers demonstrating good faith efforts aren't penalized for missing the 10% reduction target.
Tools available: Check if your location is within one mile of fixed-route transit service using Oregon DEQ's interactive map.
Learn more: Oregon ECO Program →
While not required, these programs provide financial incentives for employers who offer commuter benefits. These tax credits and deductions can significantly reduce or even eliminate the cost of providing commuter benefits:
Type: Individual tax deduction (not mandate)
Who benefits: Massachusetts residents
Benefit amount: Up to $750 annually
Eligible expenses:
How it works: Massachusetts residents can deduct these commuting expenses on their state tax returns, reducing their taxable income.
Expanded in 2023: Program was significantly expanded to include more expense categories.
Learn more: Massachusetts Commuter Tax Deduction →
Type: Employer tax credit (not mandate)
Who benefits: Maryland employers
Benefit amount: 50% of the value of employee transit subsidies (up to $100 per employee per month)
Eligible benefits:
How it works: Employers claim the credit against Maryland state taxes, effectively recovering half of their commuter benefit costs.
Strategic advantage: This turns commuter benefits from a cost into a revenue opportunity for Maryland employers.
Learn more about Maryland incentives →
Type: Employer tax credit (not mandate)
Who benefits: Colorado employers with 3+ employees
Program: House Bill 22-1026 (launched 2023)
Benefit amount: Up to 50% of eligible transportation expenses
Eligible employer types:
Eligible expenses:
What's NOT covered:
How it works: Colorado employers can claim a tax credit for providing alternative transportation options that reduce solo driving. The credit covers up to 50% of eligible expenses, making it one of the most generous state incentive programs in the nation.
Documentation requirements: Employers must maintain proper documentation of expenses and program participation to qualify for the credit.
Strategic advantage: With proper planning, Colorado employers can significantly reduce the net cost of their commuter benefits program while supporting sustainability goals and reducing traffic congestion.
Learn more: Colorado Tax Credit Program →
While specific requirements vary by jurisdiction, most commuter benefit mandates share common elements:
Most mandates allow employers to choose from:
Common eligibility criteria include:
Non-compliance with commuter benefit mandates can result in significant penalties:
Highest penalties:
Moderate penalties:
Beyond direct fines:
Most jurisdictions use escalating penalties:
For a company with 200 employees in multiple mandate cities, non-compliance costs could exceed $100,000 annually.
Managing commuter benefits compliance, especially across multiple jurisdictions, requires systematic approach:
Tool: Use Fleet's free compliance risk calculator to identify which mandates apply to your company.
Select the most practical approach:
Consider:
Managing commuter benefits across multiple jurisdictions doesn't have to be overwhelming. Fleet's platform provides:
✅ Automated compliance tracking across all mandate locations✅ Built-in registration and reporting to local authorities✅ Real-time eligibility monitoring based on employee location✅ Seamless payroll integration with 180+ HRIS systems✅ Regulatory update alerts when mandates change✅ Expert compliance support from specialists who know local ordinances✅ Comprehensive documentation for audits✅ Multi-location management from a single dashboard
Fleet customers save an average of 30+ hours monthly in administrative time while eliminating compliance risk.
For multi-location employers:
For growing companies:
For compliance-conscious organizations:
Explore Fleet's compliance solutions →
Check your compliance risk now →
Generally, no. Most mandates apply only to employees who physically commute to a worksite within the mandate jurisdiction. However, specific definitions of "covered employees" vary by location.
You must comply with each applicable mandate based on where employees work. Fleet's platform automatically manages multi-jurisdiction compliance.
Yes, and this is often necessary since mandates have different requirements. You can offer enhanced benefits in some locations while meeting minimum requirements in others.
It depends on the jurisdiction. Some mandates (like Richmond, CA) explicitly include part-time workers, while others have minimum hours thresholds (typically 10-35 hours per week).
You typically have 30-90 days to register and implement a compliant program. Check the specific mandate's timeline requirements.
Yes, these are voluntary benefits. However, you must offer them to all eligible employees. The mandate requires the offering, not employee participation.
This varies. NYC's mandate, for example, explicitly excludes union employees, while most other mandates include all employees regardless of union status.
The IRS typically adjusts Section 132(f) limits annually based on inflation, usually announced in October-November for the following year.
Generally:
Keep records for 3-5 years depending on jurisdiction.
Yes, in most jurisdictions. The mandate requires offering the benefit, not achieving a participation rate. However, some programs (like Portland's ECO) do measure outcomes.
Commuter benefit mandates are expanding across the United States as cities and states seek to reduce traffic congestion, improve air quality, and make commuting more affordable. Whether your company faces mandatory compliance or wants to take advantage of valuable tax incentives, understanding these programs is essential.
Key takeaways:
The good news? You don't have to navigate this complexity alone. Fleet handles all aspects of commuter benefits compliance, from registration and reporting to employee enrollment and ongoing program management.
Ready to simplify your commuter benefits compliance?
Check if your company needs to comply →
Explore Fleet's compliance solutions →
Schedule a demo with our compliance experts →
About Fleet
Fleet is the leading commuter benefits platform, helping employers nationwide navigate compliance requirements while providing employees with flexible, sustainable transportation options. With seamless integrations, automated compliance management, and expert support, Fleet makes commuter benefits simple—no matter how many locations you have.
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