As an employer, it's important to know what kind of commute your employees are dealing with. In this article, we're looking at Southwest commuting expenses as part of our ongoing series to review commuting expenses around the country.
Southwest Traffic and Expenses
The Southwest can be one of the toughest parts of the country for commuters. That region, along with the Southeast, has the lowest rates of public transportation use, according to the U.S. Census Bureau, so it's likely all of your employees are driving to work. The actual commute depends on where you live. For example, Houston is one of the worst cities in the country for traffic, reports the Houston Business Journal. Other Southwestern cities, however, are not typically as bad as cities in other parts of the country.
Overall, commuting expenses are higher in the Southwest because driving on average costs more than public transportation, according to an analysis from The Simple Dollar. If your business is located in a big Southwestern city, specifically Houston, your employees likely have one of the most expensive commutes in the country.
Employer Reimbursement Program
The most common way for employers to help employees pay for their commutes is through the commuter benefits reimbursement program. Under this program, you set up your payroll so that employees put money aside directly form their paycheck for commuting expenses. Since it takes money out of pretax income, they will owe less in taxes overall. For example, employees in the 25 percent tax bracket save 25 cents in taxes for every dollar they spend through this program. Eligible commuting expenses include bus passes, metro passes and parking expenses.
Whether your employees will value this program most likely depends on whether parking is free by your workplace. If you are in a major metro area and employees pay for parking, they will definitely benefit from this kind of program. However, employees may be indifferent if parking is free, since the program does not apply to regular car expenses like gas, maintenance and repairs.
Currently, there are no government initiatives in the Southwest for commuting expenses. Cities with more public transportation, such as New York and San Francisco, have made it mandatory for employers to set up employee reimbursement programs, notes Forbes. However, a similar movement is unlikely for the Southwest, as city governments are more focused on improving driving conditions for drivers, for example, by expanding the highways in Houston. As a result, it remains your decision whether you want to set up a reimbursement program.
Commuting in the Southwest is tough and, unfortunately, there is not much tax help you can give your employees. You may want to consider options like flextime and working from home opportunities that can reduce the amount of time employees spend commuting. Either way, be sure to thank them for the daily grind they put in every day to get to work.
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