As a small business owner, it's important to understand what your employees are dealing with when commuting to work, and what employer reimbursements they expect to help your benefits package stay competitive. To help you prepare, we're covering commuting expenses in different regions as part of an ongoing series. This edition looks at Midwest commuting expenses.
Midwest Commuting Expenses
Commuting in the Midwest has its own unique challenges, especially in the winter. The way employees get to work depends on where they live in the Midwest. In bigger cities like Chicago and Minneapolis, roughly 5–11 percent of commuters use public transportation, according to the U.S. Census Bureau. Overall, the Midwest has a moderate use of public transportation: less than the Northeast but more than the South. Those that reside outside of the cities tend to drive to work.
Since it costs less to take public transportation than to drive, according to Simple Dollar's calculations, Midwest commuting expenses are also average compared to other regions. Commuters in the cities pay less on average, but also spend more time commuting to work.
The easiest way to help your employees manage commuting expenses is through the commuter benefits tax reimbursement program. With this program, you set up your payroll so employees can pay their commuting expenses out of pre-tax income. If someone is in the 25 percent tax bracket, for example, they will save 25 percent on the cost of their commute. With this program, they can pay for up to $255 a month of eligible commuting expenses out of pre-tax income, notes Forbes.
The program only allows these pre-tax dollars to be used toward certain expenses, such as bus passes, subway tickets and parking costs. Because commuting in the Midwest is a bit of a mix between driving and public transportation, you may want to survey your employees in advance to confirm they would use this program.
In some cities, governments have pushed to make the commuting reimbursement program mandatory for employers. This is the case in NYC, San Francisco and Washington, D.C. There are currently no initiatives like this in the Midwest, but if these programs are successful in other areas, Chicago may look to do something similar because it also has a high use of public transportation.
In the right situation, the commuter benefits tax reimbursement can be quite valuable. While you can't help your employees deal with the snow, at least you can help them manage their Midwest commuting expenses.
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