Taxable Fringe Benefits

All financial incentives received from the Commuter Choice Program are considered taxable reportable income which must be reported to the State Controller's Office on a monthly basis. With exception are transit, rail, and vanpool reimbursements per Internal Revenue Code § 132(f). 

Tax deductions will be reflected on employee payroll checks following the month the benefit was received. For example, rewards posted on April 15th will be taxed on the May paycheck. Taxes are based on a mandatory "flat" tax rate at 35.65%. The breakdown based on 2018 tax withholding rates is as follows:

 

Tax Rate
Federal 22%
State 6%
Soc Sec 6.2%
Medicare 1.45%
Total 35.65%

Frequently Asked Questions

 

Why are our commuter dollars being taxed?

CSUF reporting of transportation fringe benefits is mandated by Federal taxing guidelines via the CSU Chancellor's Office Technical LetterPDF File . The only qualified transportation fringe benefits that are not taxed are transit, rail, and vanpool. 

 

35.65% tax rate is so high!!

35.65% is a mandatory "flat" tax rate for taxable fringe benefits. Keep in mind that at the end of the year your individual tax bracket may be lower, and you may get a return on the amount that is taxed. Check with your professional tax accountant for further personal income tax assistance. Commuter Rewards are disbursed monthly in the form of a check or direct deposit. The mandatory tax withholding adjustments will be deducted from your paycheck.

 

If I earn 20 commuter reward dollars, after taxes, how much will I actually receive?

After the $20 commuter reward dollars is posted on to your account, a report is sent to the State Controller's Office via payroll. The appropriate taxes will then be deducted on your following payroll check for amount posted. See the below estimates:

Sample Posted financial incentive Flat Tax Rate Deduction reflected on paycheck Financial incentive Net
Commuter Rewards $ 4.00 35.65% $ 1.43 $ 2.37
Commuter Rewards $ 10.00 35.65% $ 3.57 $ 6.43
Commuter Rewards $ 20.00 35.65% $ 7.13 $ 12.87

 

Do I have to accept commuter rewards? I do not want to deal with the tax issue, but I still want to participate in the Commuter Program as you offer other benefits such as carpool parking, guaranteed return trip and rideshare permits.

Commuter Choice Participants have the option to decline commuter rewards on a monthly basis. The online tracking forms come with a "decline rewards" box.

 

Now that my commuter rewards have been reduced, why should I stay in your program?

The positives are far greater than the tax implications. Improving air quality is a big plus in itself. The ability to reduce the wear and tear of your vehicle, reduce time and stress spent on traffic congestion, and reduce the time spent dealing with the parking demand on campus is another major plus. Other positive benefits include:

Carpoolers:

  • Reduce fuel, maintenance and parking costs.
  • Preferential access to freeways and use of special high-occupancy vehicle (HOV) lanes.
  • Preferential carpool parking
  • Time to read, sleep, or work during the commute.

Walkers & Cyclist:

  • Walking and bicycling are healthy and inexpensive commute options.
  • Save time over driving, if you also consider finding a place to park and walking from the parking lot to your worksite

What programs do you have that are not taxed?

Vanpool, Bus & Rail - Tax Free!

  • The E-Pass program was designed to get you to campus and back without the hassle. It is available to all CSUF faculty and staff with a valid Titan Card. Just swipe your E-Pass card through the farebox inside the bus, and your fare is automatically paid on all local routes. It’s easy. It’s convenient. And best of all, it’s FREE.
  • Rail and Vanpool participants who do not own a parking permit receive a 100% reimbursement (up to $120/month) from their monthly rail cost. Participants who own a parking permit receive 25% reimbursement (up to $30/month.