Commuter Benefits Savings Calculator

How the 2026 commuter benefit limits work

A commuter benefit lets your employer take transit and parking costs out of your pay before tax. For 2026, IRS Revenue Procedure 2025-32 sets two monthly limits under Internal Revenue Code section 132(f): $340 for transit passes and vanpool rides combined, and a separate $340 for qualified parking. You can use both at once, so a commuter who parks at a station and takes the train can set aside up to $680 a month.

The limits work month by month. A cheap month doesn't raise the next month's limit, and anything over a limit is added back to your wages and taxed like the rest of your pay. The calculator shows that amount on its own line, as money you pay after tax.

IRS Publication 15-B defines what qualifies. A transit pass covers mass transit (bus, rail or ferry) and vanpools in a vehicle that seats at least six adults besides the driver. Qualified parking is parking at or near work, or where you catch transit, a vanpool or a carpool; parking at or near home doesn't count. Bicycle commuting no longer qualifies: P.L. 119-21 permanently eliminated that exclusion for tax years beginning after 2025, so a bike reimbursement is taxable pay. Self-employed people aren't employees for this benefit, so they can't use it.

What a pre-tax commuter deduction saves: federal, FICA and state

The calculator works out your federal income tax, Social Security, Medicare and state tax twice: once on your full salary and once on your salary minus the yearly pre-tax amount. The difference is your saving. That catches a deduction that drops part of your pay into a lower federal bracket, which a single marginal rate would miss. Our guide to pre-tax vs. post-tax deductions explains the order payroll uses.

Within the limits, commuter benefits are also exempt from Social Security and Medicare (Pub 15-B, Table 2-1). That adds 7.65% (6.2% Social Security plus 1.45% Medicare) to your income tax saving. Social Security stops at the $184,500 wage base for 2026, so a salary near or above it saves less on that line, or nothing. Payroll also withholds the 0.9% Additional Medicare Tax on wages over $200,000 from one employer, so pay above that saves it too.

Take a single filer earning $104,000 in New York, paid every two weeks, who spends $250 a month on a transit pass and $400 on parking. Only $340 of the parking fits under its cap, so $590 a month ($7,080 a year) comes out pre-tax and the other $60 a month is paid after tax. In the calculator's estimate, that saves:

• Federal income tax: $1,557.60
• Social Security: $438.96
• Medicare: $102.66
• New York income tax: $417.72

That's $2,516.94 a year, about $96.81 per paycheck, or roughly 35.6 cents saved per pre-tax dollar. Counting the $60 of parking that stays after tax, it's a 32.3% discount on the $650 the commute costs each month.

States that tax commuter deductions: New Jersey and Pennsylvania

Most states with an income tax follow the federal exclusion. New Jersey and Pennsylvania are the exceptions. New Jersey's Technical Bulletin TB-24(R) says a payroll deduction for a commuter transportation account can't be treated as pre-tax for its Gross Income Tax. Pennsylvania's withholding guide lists salary-reduction contributions toward federally qualified transportation fringes among the pay it taxes, even though federal wages leave them out. In both states the calculator shows no state saving, while the federal, Social Security and Medicare savings still apply. Move the $104,000 example to either state and the calculator's estimate drops from $2,516.94 to $2,099.22 a year.

Massachusetts follows the exclusion with its own 2026 cap of $335 a month per category (DOR TIR 25-9), so the calculator uses $335 for Massachusetts tax and $340 for the rest. The nine states with no wage income tax (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming) have no state tax to save. For every other state, the calculator assumes the state follows the federal exclusion and labels the figure as an estimate.

City and county income taxes, such as New York City's or Philadelphia's, aren't included. The local income tax calculator covers those.

Picking the right monthly amount

Set aside what you'll actually spend. If you spend less, your plan can carry the unused amount over to later months, but it can't pay it back to you in cash, even when you leave the job (Treas. Reg. §1.132-9, Q/A-14 and Q/A-15). Hybrid and part-time commuters should enter a typical month's cost in the calculator, not the full cap.

Costs over a cap still get paid, just with after-tax money: if your parking runs $400, setting aside more than the cap doesn't save more tax. To see your take-home pay with the deduction, add it in the Pay44 app as a Custom deduction set to Before tax with FICA exempt Yes and a fixed amount per paycheck. For a quick take-home estimate without deductions, use the paycheck calculator.

Estimates only, not tax or legal advice. Check your plan's rules with your employer.