The IRS is helping businesses cut their transportation costs but, even better, businesses are helping employees cut their costs as well.
Shout hallelujah! It’s finally here. The annual IRS business mileage cost adjustment, which takes effect every January 1.
This year, it’s an unusually large change. Your company can now deduct 4 cents a mile more against its taxes for each business mile traveled than it could in 2006. The rate has gone from 44.5 cents a mile to 48.5.
Usually that adjustment is just a penny or so, but this year, IRS is reacting to the giant jump in gas prices last year. Although, at this writing, prices have ameliorated from a sky-high $3.05 per gallon national average in August, they’re still far above what they were as recently as January 2005 … a what-now-seems-piddling $1.75 a gallon.
Of course, while the IRS change helps business miles, it does nothing for commuter miles, which are not tax-deductible unless the employee is already on the clock before heading for a work assignment. But where Uncle Sam has proved stingy on commuting, employers have begun to help.
It’s not all altruistic, of course. Helping defray employees’ commuting expenses is a powerful incentive against their finding jobs closer to home, as well as being a morale booster and paycheck stretcher, especially for lower income workers. Here’s what some bosses are doing to ease the expense, if not the unpleasantness, of the daily trek.
–Prepaid Gas Cards. Usually used as incentives for good job performance or attendance, these cards can be obtained in any denomination. Their use is increasing, says the website ecount.com, which measures their use. Demand for prepaid gas cards is up 500 percent over the last year. Many vendors are listed on the Internet.
–Parking Programs. “How you gonna keep’em down in the city” when suburban businesses are so much closer to employees’ homes? One way is to pay for employee parking, either through a prepaid garage space or a subsidy check. A variation is the parking cash-out program, which offers workers the cost of a space as a cash bonus if they don’t drive to work. Municipal governments like this, and will sometimes help subsidize this and other employer-offered traffic-reduction programs (carpools, vanpools, etc.) through tax breaks or other incentives.
–Telecommuting. Perhaps the ultimate solution to commuting expenses is reducing the commute to the distance between one’s bedroom and home office. Where some employers continue to fear that they’ll pay for watching soap operas, several studies indicate that telecommuters are often more productive than their workplace-bound counterparts. By eliminating hours in transit, more time is available for work. The daily traffic nightmare that defeats worker motivation before an employee even reaches the job is eliminated as well.
Telecommuting may also mitigate the accessibility and reasonable accommodation issues that come with compliance with the Americans for Disabilities Act, and also mesh well with the Family and Medical Leave Act. And in fact, reports BLR’s website Compensation.BLR.com, “Managers expect higher performance from remote workers because of the less disruptive work environment at home.”