There are several ways that employers can provide this employee benefit:
Employer-paid—The employer directly subsidizes the cost of vanpools,
typically by providing a 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.
Employee-paid—Also called a pre-tax deduction, the employer allows
the employee to reserve income on a pre-tax basis for vanpool costs. The employer
saves payroll taxes on the reserved income and the employee saves payroll
and federal income taxes.
Combination of the two—The employer covers part of the cost of transit,
and allows the employee to pay for the remainder with pre-tax income.