Meet Amanda
- An employee of ABC Corporation
- Has worked at ABC for 5 years
- Monthly gross salary of $3,000
- Married with no kids, 2 exemptions
- Rides Sun Tran to work
| Amanda's Taxable Income |
FICA taxes @ 7.65% Federal Withholding Total Taxes |
Transit Pass Cost |
Take-Home Pay |
|
|---|---|---|---|---|
| No pre-tax income |
$3,000.00 | $229.50 FICA $360.03 FW $90.01 SW $679.54 Total |
$35.00 | $2,285.46 |
| Using pre-tax income |
$3,000.00 - $35.00 $2,965.00 |
$226.82 FICA $350.97 FW $87.74 SW $665.53 Total |
$2,299.47 | |
| Tax Savings for Amanda using pre-tax income |
$2.68 FICA $9.06 FW $2.27 SW $14.01 Total |
Annual Savings: 14.01 x 12 = $168.12 |
||
By deducting the cost of her bus pass from her pre-tax earnings, Amanda saves almost $100 per year, or nearly $500 since she has been employed by ABC.
How Amanda benefits from the pre-tax option:
- Saves money on her monthly bus pass
- Enjoys the convenience of getting her pass at work
- Reminded monthly that her employer is providing her a benefit
How ABC Corporation benefits from giving Amanda a pre-tax option:
- Provides a visible and valued employee benefit at minimal cost
- Enhances Amanda's wage and benefits package
- Saves on FICA taxes
- Offers a benefit that is simple to set up and manage
ABC Corporation's Savings
- Annual FICA savings for 1 employee = $ 32.16
- Annual savings for 10 employees = $321.60
- For 100 employees = $3,216.00