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Employer Commute Services: ORCA passes for employees

Select an ORCA pass program

ORCA Business Passport

ORCA Business Passport is a comprehensive, annual transportation program that is only available as an employer provided benefit.

ORCA Business Choice

Consider ORCA Business Choice if your company needs a program offering monthly passes or e-purse deposits at retail prices:

Advantages of ORCA pass programs for employees

Provides tax savings for both employer and employee

Companies and their employees can take advantage of tax-free and pre-tax commuter benefits.

Attracts and retains good employees

Adding transportation benefits enhances the company's overall benefits package. Transportation benefits cost less than other regular benefits but employees often use them more regularly, making them highly valued. Even if employees don't take advantage of these benefits, they remind employees that commute options are available. Given the cost of hiring and re-training even a single employee, this low-cost benefit could easily pay for itself as a factor in employee retention.

Reduces parking needs

Whether you pay for off-site employee parking or offer free parking, finite parking can limit company growth potential, use up customer parking space and add maintenance costs. Paying for outside parking is expensive for the company or the employee. Encouraging public transportation use can reduce these expenses.

Boosts wages by lowering transportation costs

Transportation benefits are a low-cost wage enhancement. Where wage increases are limited, transportation benefits effectively provide a monthly salary boost by reducing transportation costs through either a company subsidy or an employee-paid pre-tax option, or a combination.

Enhances company reputation

Traffic congestion, air pollution and environmental degradation are major topics of concern in our region. Companies that address these issues by providing commute benefits become known as leaders, good companies to work for, and good neighbors.

Lowers number of employees driving alone

If your company is one of the 600 companies in King County required by Washington State's Commute Trip Reduction law to reduce the drive-alone rate among your employees, offering bus passes at work can be a very effective element in your transportation program.

Tax-free commuter benefits for employers and employees

ORCA pass commuter benefits are similar to offering other tax-free programs, such as a flexible spending account, except the tax rules they fall under make commuter benefits easier to implement and manage. Compare Section 132(f) Commuter Benefits Plans versus Section 125 Flexible Spending Plans.

Subsidies: Employer can help pay costs or not

The company decides whether to subsidize (or help pay for) any part of the cost. An employer may offer commuter benefits in three ways:

  • Employer-paid: Company covers the full cost of the benefit with a tax-free employer-paid subsidy.
  • Employee pre-tax deductions: Company offers an employee-paid pre-tax payroll deduction.
  • Employee/Employer share costs: Company and employee share costs with a combination of both of the above.

Tax savings for employers and employees

Option Employer Tax Benefits Employee Tax Benefits

Employer-Paid:
Employer provides employees with an ORCA card containing a monthly or annual pass or e-purse amount to use for commuting via bus, train, vanpool, or ferry.

Employer can provide employee with up to $130/month as a tax exempt benefit.

Employer pays no payroll taxes on the value of the benefit, which makes providing this benefit cheaper than providing a comparable salary increase.

The expense is a tax-deductible business expense for the company.

The expense can be claimed in part against State B&O tax.

The employee does not pay any taxes on the value of the pass provided.

Employee Pre-Tax Deductions:
Employer allows employees to reserve up to $130 in pre-tax income each month in the amount needed to pay for transit or vanpool.

Employer uses employee-reserved funds to purchase the pass requested by employee.

Employee authorization sample form for employee-paid benefit in MS Word or PDF format

Employer pays no payroll taxes on the income that is reserved by the employee through a pre-tax deduction.

Employee saves on income tax and payroll tax. The payroll amount reserved is no longer treated as taxable salary.

Employee/Employer Share Costs:
Employers pay transit or vanpool costs up to a limit determined by the employer. The employee pays for the remainder of the costs either through a pre-tax payroll deduction or directly out-of-pocket.

Total employer and employee paid costs cannot exceed the monthly limits of $130/month for transit and vanpool without changing the tax treatment.

Employee authorization form for shared cost in MS Word or PDF format

Same Employer Tax Benefits as Employer-Paid above for the employer's share of costs.

Employer further saves payroll taxes on the portion of the benefit paid by the employee through pre-tax deduction.

Employee does not pay taxes on the portion of the benefit provided by the employer.

Additionally, the employee saves on income tax and payroll taxes by taking a pre-tax deduction to pay for the remainder of his/her commuting costs.

Tax-exempt and pre-tax limits are set by the Internal Revenue Service

IRS limits for the 2014 tax year:

  • Up to $130 per employee per month for vanpool, bus, ferry, rail (all public transportation).
  • Up to $250 per employee per month for qualified parking, or
  • Up to $380 per month per employee for both public transportation and qualified parking.

Employers are encouraged to consult a tax advisor or other professional for detailed information regarding the tax implications of commute benefits.

Resources and support

ORCA - One Regional Card for All

Contact us

For assistance with pass programs, use our Employer Commute Services form or call Employer Services at 206-477-5858.