Driving to work alone increases air pollution, wastes energy, and increases traffic congestion. These are some of the hidden costs that do not figure into the "free parking" equation. The nation's investment in public transportation is not being fully used. To get more cars off the roads and commuters into efficient travel arrangements, the cost of commuting on public transportation can now be a tax-free employment benefit through Commuter Choice Programs. [For purposes of this study, Commuter Choice Programs are defined as transit- and vanpool-qualified transportation fringe benefits under Section 132(f) of the Internal Revenue Code.]

Recent changes to the Internal Revenue Code make it easier for companies to offer public transportation benefits to their employees. It is estimated that U.S. employers spend $36 billion annually on employee parking. It is the most common commuter benefit offered to employees and the most common fringe benefit of any kind. Nearly all those eligible for free parking drive to work alone--this is the problem.

Commuter Choice Programs give employees an attractive alternative to driving to work alone--a real choice. As a result of changes made by the Transportation Equity Act for the 21st Century (TEA-21), employers may now provide up to $65 a month or up to $780 a year, in eligible transit and vanpool costs, tax-free to an employee using either employee pre-tax salary, employer funds, or a combination thereof. Participating employers lower their FICA and federal income tax costs. In many areas, state and city income taxes are reduced as well. Commuter Choice Programs may be used for public transit buses, trains, ferries, and vanpools.

Research is needed to analyze how Commuter Choice Programs are being designed and implemented and the effects of these programs. The research will identify opportunities and strategies to increase and retain participation in Commuter Choice Programs by both employers and employees. The results of this study should be useful to those who plan, administer, promote, and participate in Commuter Choice Programs.

The objective of this research is to develop and recommend strategies to improve the effectiveness of Commuter Choice Programs throughout the United States.

Status: The final report has been published as TCRP Report 87. Additional funds were allocated to this project by the TOPS Committee in October 2002 to conduct further research which is being conducted as TCRP Project H-25A by ICF Consulting.

TCRP Report 87 - Strategies for Increasing the Effectiveness of Commuter Benefits Programs