Commuter Benefits Requirements by State and City for 2026

With rising gas, toll, and vehicle repair costs, commuting to work is an expensive business for US employees. But exactly how much you’ll pay depends on where you live. New York City workers are the hardest hit, spending an average of $5,908 per year on travel to and from work. Research from Mercury Insurance reveals that employees in San Diego and Houston trail slightly behind, paying annual commuter costs of $5,801 and $4,864, respectively. 

Employee location doesn’t just influence how much commuters pay; it can also determine whether employers are legally required to help offset these costs. This guide explains where employers must provide commuter benefits, how the regulations work in specific jurisdictions, and what employers must do to stay compliant.

Are US employers required to offer commuter benefits?

No federal law requires US employers to offer commuter benefits. But Section 132(f) of the Internal Revenue Code allows employers to offer qualified transportation fringe benefits on a tax-advantaged basis. These benefits enable employees to use pre-tax income to pay for eligible commuting expenses, including transit passes, commuter highway vehicles, and qualified parking.

While commuter benefits remain optional under federal law, several states, cities, and regional authorities have enacted mandates requiring covered employers to offer access to these pre-tax commuter benefits. These local laws build on the federal tax framework, defining when and where employers must make commuter benefits available to eligible employees.

Beyond these IRS-qualified pre-tax benefits, some employers also offer commuter subsidies and post-tax options to cover expenses that fall outside of IRS limits. Commuter Lifestyle Spending Accounts (LSAs), for example, can support costs such as gas, tolls, or rideshares that aren’t eligible under Section 132(f). 17% of employers that use Benepass now offer Commuter LSAs, with annual stipends ranging from $400 to $4,980. These programs give employers a flexible way to support commuting costs while improving retention and helping employers adapt to return-to-office mandates. 

What happens if employers don’t comply with commuter benefits regulations? 

Commuter benefit mandates are enforceable local employment laws. Employers that fail to comply may face the following types of enforcement, depending on the jurisdiction. 

• Civil fines and penalties: Some jurisdictions impose fines for each violation or for each employee not offered a required benefit. For example, under the New Jersey Commuter Benefits Law, non-compliant employers may face civil penalties ranging from $100 to $250 for a first violation, with an additional $250 penalty for each subsequent 30-day period of non-compliance if the violation is not corrected.
• Compliance notices and corrective action requirements: Employers may be required to implement a compliant program within a specified timeframe.
• Ongoing monitoring or reporting obligations: Certain jurisdictions require employers to register or certify compliance with the relevant authority.

Commuter benefit requirements by state and city 

Several states also restrict cities from passing their own commuter benefits mandates. In Alabama, Arkansas, Florida, Indiana, Iowa, Georgia, Kansas, Michigan, Missouri, North Carolina, South Carolina, Texas, and Wisconsin, state preemption laws prevent local governments from requiring employers to offer commuter benefits. However, employers in these states can still voluntarily provide commuter benefits and receive federal tax advantages.

How to determine if your company must offer commuter benefits

Commuter benefit mandates depend on several criteria. Use the steps below to determine whether you’re required to offer commuter benefits, and what to do next.

Step 1: Identify where your employees are physically working

Commuter benefit mandates are enforced at the city, state, or regional level, and each jurisdiction defines its own eligibility thresholds and requirements. As a golden rule, employers must assess their compliance obligations based on where employees work, not where the company is based, or where the employee lives. 

This means employers must evaluate compliance separately in each location where employees are physically working. Meeting the threshold in one jurisdiction creates an obligation there, but it doesn’t apply automatically to employees in other locations. 

Example: If your company HQ is in Florida but employs 22 people working in New York City, you must offer commuter benefits to your New York City employees under the NYC Commuter Benefits Law. Your employees in Florida would not be covered, because no statewide commuter benefit mandate exists there.

2. Check if those locations have commuter benefit mandates

Once you’ve identified where employees are working, check whether those jurisdictions have active commuter benefit requirements. Employers should review official guidance from the relevant city or state agency to confirm whether the law applies to their organization and understand any additional compliance requirements.

3. Compare your headcount against local thresholds

Most commuter benefit mandates apply only after employers reach a minimum number of employees working in the jurisdiction, for example, 10, 20, or 50 employees. 

As thresholds apply at the jurisdiction level, employers should review headcount in each regulated location separately to determine whether commuter benefit requirements apply.

4. Confirm which employees are eligible under the law

Once you’ve confirmed that your organization meets the employer threshold in a regulated jurisdiction, the next step is to determine which employees must be offered commuter benefits. Eligibility is typically based on how many hours an employee works within the jurisdiction.

For example, some commuter benefit laws apply only to employees working an average of 30 or more hours per week, while others include part-time employees working as few as 10 hours per week. Eligibility may also depend on how long an employee has been employed or whether they regularly perform work in the jurisdiction.

Review the eligibility criteria defined by the local regulation and identify which employees qualify.

5. Monitor employee location changes over time 

Commuter benefits compliance isn’t a one-and-done exercise. To keep up with the red tape, review employee work locations regularly and reassess compliance whenever headcount changes in regulated areas. 

How do multi-state employers manage commuter benefit compliance? 

You might have a strong grasp of your commuter benefit responsibilities in your local jurisdiction. But what happens if your organization expands into a new city or state, or if your employees work remotely in different locations? Multi-state employers should build commuter benefit compliance into their broader workforce and benefits processes by: 

• Reviewing commuter benefit requirements before hiring in a new jurisdiction: Local mandates may apply as soon as you reach the employee threshold in that location.
• Assessing compliance when employees relocate: An employee moving to a regulated jurisdiction or working from home may trigger new obligations, even if your company doesn’t have an office there.
• Maintaining clear internal processes for tracking eligibility: Keeping employee location and eligibility data up to date helps ensure commuter benefits are offered where required.

Support your employees’ commute with Benepass 

Commuter benefit mandates exist in a growing number of cities, states, and regional jurisdictions. Beyond compliance, commuter benefits also play an important role in supporting employees with the cost and strain of getting to work. To learn more about how other employers are handling this important topic, the Benepass Benefits Benchmarking Report 2026 provides insight into broader benefits trends, so employers can evaluate how commuter benefits might fit into their overall benefits strategy. 

As a practical solution, Benepass Commuter is a pre-tax benefits program that makes it simple for employers to offer and manage commuter benefits, whether you operate in one jurisdiction or many. Here’s how it works:

1. You choose what to include in your benefits program: for example, public transportation, carpooling, bicycles, or scooters. 
2. Employees enroll in the Benepass Commuter program and elect their contributions during open enrollment. 
3. Benepass automatically links to your payroll, enabling auto-enrollment for your employees. 
4. Employees join Benepass and start using their commuter benefits. 

Ready to offer supportive, compliant commuter benefits to your employees? Book a free Benepass platform demo today or connect with one of our benefits specialists at sales@getbenepass.com with any questions.