Tax-Free Transit Benefits at 30: Evolution of a Free Parking Offset

Document Type

Journal Article

Publication Date


Subject Area

policy - parking, economics - subsidy, policy - equity


transit benefits, tax-free parking, monthly passes, vouchers


Tax-free employee transit benefits emerged in the 1970s along with monthly pass plans and evolved over a 30-year period to be an important part of transit marketing, transit revenue, and traffic mitigation strategies. Transit benefit plans succeeded partly because they are an “offset” to employer-provided tax-free parking, an integral part of transit’s market context in theoretical and practical terms. First authorized in 1984 at a tax-free monthly maximum of $15, transit benefit legislation was expanded numerous times and now allows a monthly maximum of $230, equaling tax-free parking. Indicating the effectiveness of workplace market development, transit benefit impacts greatly exceed what comparable changes in transit fare levels suggest. A series of innovations for delivering transit benefits and unique public-private relationships provided ever-better ways to meet employer needs, and will continue to evolve as transit fare collection methods advance.