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Support Strategies

Financial Incentives

Financial incentives are an effective way to encourage commute options because they save employees money. They can be in the form of cash, cost reimbursements, one-time salary increases, discounts, or benefits such as paid time off. They can also be given for either first time or continued use of commute choices and be weighted according to those options the employer wishes to promote.

The most common financial incentives are:

  • Commuter subsidies for vanpool “empty seat” subsidies and cash payments to those who rideshare;
  • Transit pass programs: discounted or free passes;
  • Parking discounts for carpoolers and vanpoolers;
  • Indirect incentives such as bicycle equipment, paid time off, cafeteria meal vouchers, discount coupons;
  • Transportation allowances for all employees, usually to offset parking fees.

What are the benefits of financial incentives?
Providing financial incentives can directly reduce employee commute costs, make hiring and retaining employees easier by offering additional compensation, and reduce parking demand.

When are financial incentives most effective anywhere commute choices are promoted. However, worksite characteristics can make some more attractive than others. For example, transit subsidies and parking discounts are not always appropriate. Incentive amounts and employee incomes may also impact success.

How can an employer set up a financial assistance program?
The local Transportation Management Association (TMA) can assist employers with:

  • Getting input from employees on attractive benefits;
  • Selecting incentive types and values;
  • Exploring tax implications, i.e. whether the incentive counts as taxable income, or is eligible for tax-free benefits;
  • Determining program costs and sources for its funding (e.g., company budget, parking fees);
  • Considering support strategies, (e.g., emergency ride home, rideshare matching)
  • Establishing policies concerning eligibility, request/approval, registration, benefit maximums;
  • Producing registration forms and other materials;
  • Setting up a monitoring system;
  • Adjusting benefits for employees with differing incomes or varying commute options.
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  Last Updated:  February 1, 2005