Commuter Benefits Mandates by State

Various localities around the country have legal mandates in place to require organizations of certain sizes provide commuter benefits to their urban employees.

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Edenred Commuter Benefits Compliance Overview for 2026

As the trend towards commuter benefit mandates in various states and cities continues to grow, it is essential for organizations to understand their responsibilities.

Our 2026 guide details the commuter benefit requirements and tax incentives across the United States, helping you navigate your obligations and maximize available opportunities.

For a full guide on how to navigate your region(s)’s ordinances, download our Commuter Benefits Ordinance Guide.

Federal Commuter Benefits Under Section 132(f)

Although no federal regulation mandates the offering of commuter benefits, Section 132(f) of the IRS Code allows employers nationwide to provide tax-free Qualified Transportation Fringe (QTF) benefits.

IRS Pre-Tax Limits for 2026

For 2026, the pre-tax limits on a monthly basis are:

  • Transit and vanpool: $340 per month
  • Qualified parking: $340 per month

These figures adjust every year to account for inflation. Even in the absence of municipal mandates, offering these benefits can yield significant tax savings for both employers and employees.

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Commuter Benefit Mandates by State and City

Certain jurisdictions require organizations to implement commuter benefits. Here’s a state-by-state summary of key mandates based on employee size:

BerkeleyOrdinance

For Employers with 10+ Employees

Coverage: City of Berkeley

Requirements: Employers with 10+ employees must provide either pre-tax commuter benefits or employer subsidies.

Note: Berkeley’s efforts to support sustainability has led them to implement one of the lowest employee thresholds in the country for commuter mandates.

Coverage: City of Richmond

Requirements: Employers with 10+ full-time, part-time, or contracted employees must provide one of the following:

  • A pre-tax election under Section 132(f) (up to $340 per month for transit or vanpool).
  • Employer-paid benefits, such as transit passes or reimbursement.
  • Employer-provided transportation options, such as vanpools, buses, or multi-passenger vehicles.

For Employers with 20+ Employees

Coverage: All five boroughs (Manhattan, Brooklyn, Queens, The Bronx, Staten Island)

Requirements: Organizations with 20+ non-union employees must provide pre-tax transit benefits for various transport services including:

  • MTA subway and buses
  • Long Island Rail Road (LIRR)
  • Metro-North Railroad
  • New Jersey Transit
  • PATH trains
  • Amtrak
  • Eligible ferry and vanpool services

Penalties: Violations can incur fines of up to $250

Coverage: Entire state

Requirements: All employers with 20+ full-time employees must provide pre-tax transportation fringe benefits per Section 132(f).

Penalties: Initial fines can reach $3,000, with increasing penalties for repeated offenses ($500+ every 30 days).

Coverage: City of Seattle

Requirements: Employers with 20+ employees working a minimum of 10 hours a week must provide pre-tax commuter benefits for transit and vanpool services.

Penalties: Initial penalties can be as high as $3,000, followed by $500 every 30 days for ongoing violations.

Coverage: District of Columbia

Requirements: Employers with 20+ employees must provide pre-tax commuter benefits per Section 132(f).

Penalties: Fines can reach up to $6,000 in the first year, along with escalating penalties up to $800 per employee for continued infractions.

Coverage: City and County of San Francisco

Requirements: Organizations with 20+ employees must comply with the same requirements as those in the Bay Area mandate (see below).

Note: This is a city-specific requirement that applies on top of the broader Bay Area mandate, with a lower employee threshold.

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SanFranPhillyIllinoisOrdinance

For Employers with 50+ Employees

Coverage: Encompasses a nine-county region, including: Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, southwestern Solano, and southern Sonoma counties.

Who must comply:

  • Employers with 50+ full-time employees (averaging 20+ hours per week)
  • Employers located within the Bay Area Air Quality Management District boundaries

Requirements: Employers must provide at least one of the following:

  • Pre-tax payroll deductions for transit or vanpool (under Section 132(f)).
  • Employer-funded transit subsidies (minimum of $75/month or the cost of commute, whichever is lower).
    • *$75 minimum is set by the Bay Area mandate and is separate from the federal IRS limit of $340/month
  • Employer-provided transportation options (shuttles, vanpools, buses).
  • Other alternative commute methods (like telecommuting or carpool initiatives).

Penalties: Non-compliance can incur fines ranging from $1,000 to $10,000 per day.

Additional requirements:

  • Annual registration at 511.org
  • Quarterly reviews and record-keeping
  • Annual compliance updates

Coverage: City of Philadelphia

Who must comply:

  • Employers with 50+ employees
  • Employees working 30+ hours per week for at least one year
  • Private employers (government employers excluded)

Requirements: Companies with 50 or more employees must offer one or more of the following options:

  • Pre-tax transit benefits.
  • Employer-subsidized transit passes.
  • Direct distribution of monthly transit passes.

Penalties: Initial violations may result in fines between $100 and $150, with repeat offenses accruing fines between $150 and $300 daily.

Coverage: Los Angeles metro area

Who must comply:

  • Employers with 50+ full-time employees
  • Located within the LA metro area

Requirements: Employers with 50 or more full-time employees must provide pre-tax options for transit and vanpool expenses.

Penalties: Fines depend on circumstances and can be significant, especially for larger organizations.

Coverage: Covers 38 counties in the Chicago metro area within the six-county RTA region, including Cook, DuPage, Kane, Lake, McHenry, and Will counties.

Who must comply:

  • Employers with 50+ full-time employees (35+ hours per week)
  • Located within one mile of fixed-route transit service
  • All employer types (private, public, non-profit)

Requirements: Companies with 50+ full-time employees (35 hours or more weekly) must provide pre-tax transit benefits.

New Hire Eligibility: Begins after four months of employment.

Penalties: Determined on a case-by-case basis starting January 1, 2024.

Note: This is one of the most expansive state-level mandates, covering much of Illinois, not just Chicago proper.

For Employers with 100+ Employees

Portland, Oregon (Employee Commute Options Program)

Coverage: Portland Air Quality Maintenance Area (AQMA), including portions of Multnomah, Washington, and Clackamas Counties.

Who must comply:

  • Employers with 100+ employees at a single worksite
  • Employees working 80+ hours per 28-day period for 6+ consecutive months
  • Located within Portland AQMA
  • All employer types (private, educational, non-profit, government)

Requirements:

  • Implement commute reduction strategies
  • Achieve measurable 10% reduction in employee vehicle trips
  • Submit employee surveys and trip reduction plans
  • Document behavioral change and performance

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:

  • Pre-tax transit benefits (up to $340/month)
  • TriMet pass program discounts
  • Support from regional transportation management associations

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.

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Tax Incentive Programs (Non-Mandatory)

While these programs are optional, they offer various financial incentives for employers providing commuter benefits, potentially decreasing costs:

Massachusetts Commuter Tax Deduction

Type: Individual tax deduction (not a mandate)

Who Benefits: Massachusetts residents

Benefit Amount: Up to $750 annually

How it works: Massachusetts residents can deduct these commuting expenses on their state tax returns, reducing their taxable income.

Eligible Expenses

  • Transit fares
  • Road tolls
  • Bicycle purchases and maintenance
  • Bikeshare memberships

Maryland Commuter Tax Credit

Type: Employer tax credit (not a mandate)

Who Benefits: Maryland Employers

Benefit Amount: 50% of employee transit subsidies, capped at $100 per employee, per month.

How it works: Employers claim the credit against Maryland state taxes, effectively recovering half of their commuter benefit costs.

Eligible Expenses

  • Guaranteed Ride Home programs
  • Vanpool subsidies
  • Transit subsidies
  • Cash in lieu of parking
  • Telework programs
  • Carpool programs
  • Active transportation (bike/walk)

Colorado Alternative Transportation Options Tax Credit

Type: Employer tax credit (not a mandate).

Who Benefits: Colorado employers with 3+ employees.

Benefit Amount: Up to 50% of eligible transportation expenses. Maximum $250,000 annual cap ($125,000 max credit), $2,000 annual limit per employee.

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.

Eligible employer types

  • Corporations
  • Partnerships
  • Joint ventures
  • Common trust funds
  • Limited associations
  • Limited liability companies (LLCs)
  • Pools or working agreements
  • Certain tax-exempt entities

Eligible expenses

  • Transit passes and subsidies
  • Active transportation (bike/walk programs)
  • Shuttle services
  • Carpool/vanpool programs
  • Shared mobility services
  • Administrative expenses for program management

What's NOT covered

  • Electric vehicle charging stations
  • Rental cars
  • Uber/Lyft rides
  • Out-of-state transportation expenses
  • Physical property (bike racks, locker rooms)

Common Compliance Requirements

While precise mandates differ, most commuter benefit programs have foundational elements, including:

Registration and Reporting

  • Initial registration with regional transit or environmental agencies.

  • Annual confirmations of continued compliance.

  • Retention of employee census data reflecting participation rates.

  • Record retention for audits (typically 3-5 years)

Program Options

  • Pre-tax payroll deductions (the most common and cost-effective)

  • Employer-paid subsidies (full or partial)

  • Direct distribution of transit passes

  • Employer-provided transportation (shuttles, vanpools)

  • Alternative programs (telecommuting, carpool matching)

Employee Eligibility

  • Often depends on minimum weekly hours (usually 20-35).

  • Employment duration (some jurisdictions require 4-12 months).

  • Geographic location (must work within mandate boundaries)

Consequences of Non-Compliance

Failure to comply with commuter benefit regulations can result in significant penalties:

High Penalties

  • Bay Area: $1,000 to $10,000 daily

  • Washington, D.C.: Fines up to $6,000 in the first year; ongoing infractions can lead to escalating costs 

Moderate Penalties

  • Philadelphia: Initial fines between $100-$150; repeating offenses can incur fines of $150-$300 daily

  • New York City: Fines up to $250 per violation

How Edenred Supports Commuter Benefits Compliance

Edenred Commuter Benefits helps U.S. employers offer commuter benefits that align with federal tax rules through structured, pre-tax benefit administration.

IRS-Compliant Pre-Tax Benefits

Edenred enables employees to pay for eligible commuting expenses — including public transit, parking, vanpools, and micromobility — using pre-tax dollars under IRS Section 132(f).

Flexible Commuter Benefit Offerings

Employers can offer multiple commuter benefit types to support different commuting needs across their workforce.

Employee and Employer Tax Savings

By offering pre-tax commuter benefits, employees may reduce taxable income, while employers may realize payroll tax savings.

Benefit Administration Tools

Employers manage commuter benefits through an online platform, while employees can enroll, manage elections, and view balances via a web portal or mobile app.

Educational Resources and Support

Edenred provides guides and informational resources to help employers and employees understand eligible expenses, IRS limits, and how commuter benefits work.

Simplifying Commuter Benefit Administration with Edenred

Edenred’s platform is designed to make commuter benefit administration easier and more accessible:

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Centralized Online Management

Employers can administer commuter benefits from one place, supporting multiple benefit types within a single platform

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IRS Limit Alignment

Benefit elections are structured to align with current IRS monthly pre-tax limits for transit and parking

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Participant Self-Service

Employees can manage their benefits online or through the Edenred mobile app, including checking balances and accessing support

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Customer Support Access

Participant support is available via phone and chat to assist with benefit usage and account questions

Why Employers Choose Edenred Commuter Benefits

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Designed for Federal Compliance

Edenred’s commuter benefits are built around IRS Section 132(f) requirements for pre-tax transportation benefits

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Broad Range of Eligible Expenses

Supports commonly used commuter options, including transit, parking, vanpools, and micromobility

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Straightforward Administration

Online tools and employee self-service features help reduce manual administration for HR teams

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Clear Guidance

Educational materials help employers and employees understand how commuter benefits work and how to use them correctly

Frequently Asked Questions

Do commuter benefit mandates apply to remote workers?

Most mandates pertain specifically to employees who commute physically to a workplace within the mandated jurisdiction.

What if my organization has workers in different mandate cities?

You must comply with each mandate relevant to the locations in which your employees work.

Can different benefits be offered in various locations?

Yes, it is often essential to comply with the differing requirements established by local mandates.

Must I offer commuter benefits to part-time workers?

This depends on the specific mandates in place; some explicitly include part-time employees, while others impose minimum hour requirements.

What type of records are necessary to maintain?

Generally, documentation should include evidence of program offerings, enrollment records, participation data, payroll deduction details, and confirmation of registrations.

Can fines be imposed even if no employees engage in the benefits?

Yes, in most cases, the mandate requires the offering of benefits, not necessarily achieving a specific participation percentage.

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