There are several ways that employers can provide this employee benefit:
Employer-paid—The employer directly subsidizes the cost of commuting,
typically by providing a transit pass or voucher to employees; the amount
of the benefit is free of payroll taxes for the employer and employee, and
the employee pays no federal income taxes on the benefit. This option is the
most likely to persuade an employee to give up the use of his/her personal
vehicle.
Employee-paid—Also called a pre-tax deduction, the employer allows
the employee to use pre-tax income to pay for a transit pass. The employer
saves payroll taxes on the reserved income and the employee saves payroll
and federal income taxes.