On October 1, 2018, the Seattle City Council passed an ordinance that requires employers of 20 or more workers to offer employees the opportunity to use pre-tax earnings to purchase commuter benefits. The ordinance is also limited to employees who work an average of 10 or more hours per week in Seattle. According to the City, the ordinance was passed in to order to reduce single occupancy vehicle driving into Seattle and encourage mass transit and other commuting options. An employee’s participation in the program is voluntary.
A pre-tax benefit program, as authorized under Internal Revenue Source Code Section 132(f), allows employees to allocate up to $255 per month from their paychecks for buses, light rail, ferry, water taxi, and vanpool commuting, and excludes these expenses from federal income tax and federal payroll tax. Covered employers are required to establish the pre-tax commuter benefit program by July 1, 2019. The legislation includes enforcement provisions which will become effective on July 1, 2020. The legislation includes a provision that fully or partially-subsidized employer provided, transit passes satisfy the requirements of the legislation.
In order to ensure your business complies with this new City of Seattle requirement, contact us at (425) 250-0205.