Meet Amanda
- An employee of ABC Corporation
- Has worked at ABC for 5 years
- Monthly gross salary of $3,000
- Married with no kids
- Rides Sun Tran to work
| Amanda's Taxable Income |
FICA taxes @ 7.56% Federal Withholding Total Taxes |
Transit Pass Cost |
Take-Home Pay |
|
|---|---|---|---|---|
| No pre-tax income |
$3,000.00 | $229.50 FICA $250.00 FW $479.00 Total |
$28.00 | $2,492.50 |
| Using pre-tax income |
$3,000.00 - $28.00 $2,972.00 |
$227.36 FICA $244.00 FW $471.36 Total |
$2,500.64 | |
| Tax Savings for Amanda using pre-tax income |
$2.14 FICA $6.00 FW $8.14 Total |
Annual Savings: x 12 = $97.00 |
||
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 = $2.14
- Annual savings for 10 employees = $21.40
- For 100 employees = $214.00