Utilization and Impacts of Commuter Tax Deductions for Businesses


During its 2020 session, the General Assembly considered Senate Bill 277 to establish an individual and corporate income tax deduction for commuter benefits provided by a private employer to its employees for the taxable years 2021 through 2025. The legislation required DRPT to study the impacts of the legislative language.

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DRPT’s analysis had several components, including considering comparable states and jurisdictions, examining the commuter benefits that Virginia businesses currently provide, and analyzing the impact of COVID-19 on public transportation.


When an employer provides a benefit to cover an employee’s cost of using public transportation, DRPT estimates that 5 to 10 percent more employees will use these services than without the benefit. Providing transit benefits has its advantages for employers. The portion of the bill providing a tax preference for public transportation benefits would have a negative General Fund revenue impact.