Tax Saver Commuter Tickets is an initiative of the Revenue Commissioners whereby Section 118(5A) TCA 1997 exempts employees and directors from benefit-in-kind taxation where an expense has been incurred by an employer on the provision of a monthly or annual bus or train pass for the employee or director.
In summary:
- The expense must be incurred by the employer on the employee’s behalf
- The employee enters a salary sacrifice arrangement whereby their gross income is reduced by the cost of the annual/monthly pass and they will not be charged to tax on the remuneration sacrificed
- The employer is allowed treat the cost of the pass as an expense for their records.
The following conditions also apply:
- There must be a bona fide and enforceable alteration to the terms and conditions of employment (exercising a choice of benefit instead of salary)
- The alteration must not be retrospective and must be evidenced in writing
- There must be no entitlement to exchange the benefit for cash
- The choice exercised (i.e. benefit instead of cash) cannot be made more frequently than once a year and then only with the consent of the employer.
See Bus Passes on Revenue.ie for full details
Benefits for Employers
Employees can achieve significant savings on the cost of commuting.
Employer will save 10.75% on Employer PRSI when you make this deduction from salary payments. Employer is allowed deduct the cost of the monthly/annual pass as an allowable expense in their accounts.
Benefits for Employees
Employees can make significant tax and PRSI savings when they receive their Annual or Monthly ticket as part of their remuneration package. Savings of up to 41% tax, 7% USC and 4% PRSI can be made on the cost of the ticket.
- Individual savings vary depending on a person’s PAYE, PRSI and USC bands.
Tax Saver Calculator
Use the below calculator to estimate your potential savings if you participate in the Tax Saver Commuter Scheme.
Savings Calculator
Select Ticket
Tax Rate:
PRSI Rate:
4%
USC:
7%
