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A Savings Account for Transportation?

Transportation Saving Accounts allow you to direct a portion of your pre-tax income into a special account that you use for qualified work-related transportation expenses.

Since you make contributions with pre-tax dollars, you save on both income and Social Security taxes. For example, if you are a commuter who pays $240 in monthly parking and transit expenses, by using this benefit your tax savings would be between $750 and $900 per year, depending on your tax bracket.

There are three basic types of expenses that you may use your savings for: parkingmass transit, and vanpooling. Your employer may offer all, a couple, or one of the categories.


Parking can be a major expense for many people, particularly in urban areas where prime spaces can cost hundreds of dollars a month. Parking accounts allow you to set aside money for employment-related parking expenses. This includes the cost of parking at or near your place of work, and at commute site parking lots (such as train stations and bus stops). Parking at or near your home does not qualify, nor does the cost of parking when you are traveling for business.

Mass transit

Do you take the subway, train, ferry, or bus to work? Many employers offer mass transit accounts, which let you to save for the cost of tickets and fares at a tax advantage. Qualified mass transit expenses include the cost of tokens, fare cards, vouchers, and other items that enable you to commute without driving.

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If you take a commuter van to work, you may be able set aside cash in a transportation savings account for those vanpool costs. According to the IRS, a van qualifies as a commuter vehicle if:

  • It seats at least six adults (excluding the driver)
  • At least 80 percent of its mileage is for transporting employees to and from the workplace

To Enroll

To participate in any transportation savings account, you have to be an employee of a company or organization that offers it as part of their benefits package. Sole proprietors, partners, and independent contractors are typically ineligible for this benefit. As with many employee benefits, you can sign up for the transportation savings account during your annual open enrollment period. At that time you agree to set aside a certain amount of pre-tax salary to pay for your qualified transportation expenses.

If your employer does offer transportation savings accounts and you are going to spend the money on those expenses anyway, it makes sense to take advantage of the program. If you don’t, you are losing out on tax savings!

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