Commuter Spending Account overview
The Commuter Spending Account is a valuable benefit that allows employees to save on commuting costs by using pre-tax dollars for eligible transit and parking expenses. This helps to reduce their taxable income while facilitating convenient commuting options.
A Commuter Spending Account typically includes separate funds for transit and parking, both of which can be accessed using a benefits card for convenient purchases.
Transit funds
The transit portion of the Commuter Spending Account covers daily commuting expenses, including:
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Bus, train, and subway fares
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Vanpool and ferry services
Parking funds
The parking portion of the Commuter Spending Account covers parking costs incurred near the employee's work location or transit stations, including:
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Parking lots and garages
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Park-and-ride facilities
Contribution limits
For the year 2025, the monthly pre-tax contribution limits are as follows:
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Transit: Up to $325
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Parking: Up to $325
It is important to check the IRS limits annually for any updates.
Eligibility criteria
Eligibility for the Commuter Spending Account typically depends on employment status and requires an active election.
Explicit enrollment
Requires an enrollment file or manual action to specific details about new enrollments or enrollment changes. This enrollment type is frequently used for Commuter Spending Accounts.
Making a purchase
Employees can utilize their Commuter Spending Account benefits card at the point of sale for both transit and parking purchases. If the card is not accepted for parking payments, they will need to submit a claim for reimbursement.
Rollover of funds
Unused funds in the Commuter Spending Account generally roll over on a monthly basis, although there may be employer-specific limits based on your company’s policy. Level provides an intake form during onboarding for your selected plans, which include an exhaustive list of all eligible coverage categories as well as customizable plan design features for the selected plan, including rollover policies.
Termination
Upon an employee's termination, the handling of remaining Commuter Spending Account funds will follow the employer's policy. The specific treatment may vary, so it’s essential to confirm the company’s stance and communicate it to departing employees if needed. All terminated employees will continue to have access to their Level account only to review past transactions and expenses.