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Why Ridesharing Is No Longer Eligible for Pre-tax Transit Benefits in 2024

Why Ridesharing Is No Longer Eligible for Pre-tax Transit Benefits in 2024

Can you use your pre-tax commuter benefits on an Uber or Lyft?

Ruth Miller
March 18, 2024

“Can I use my pre-tax commuter benefits on an Uber or Lyft?” If you remember being able to do so briefly prior to the pandemic, and now wonder why you no longer have the option, you’re not hallucinating. For several years, the answer was yes, you could use your fringe benefits on ridehailing apps, but recent quiet changes at the ridehailing companies, partially motivated by the pandemic, leave transit commuters with fewer options.

First, let’s give some context. The commuter benefits that employers are allowed to offer are defined by the US federal tax code. These regulations define transit as both “mass transit”, meaning a train, bus, or ferry, as well as trips taken:

in a vehicle that seats at least 6 adults (not including the driver) if a person in the business of transporting persons for pay or hire operates it.

These programs were never meant to include taxis–they initially covered things like jitneys and shuttle buses. When Uber and Lyft arrived on the scene, they wanted riders to be able to spend their pre-tax dollars on ridehailing. Both companies introduced specific products (Uber Pool and Lyft Line) that dispatched large SUVs. These SUVs satisfied the requirements of the commuter benefit law, where regular Lyft or Uber vehicles wouldn’t have. For several years, employees could use pre-tax dollars on ridehailing, as long as they selected one of these specific options.

Both Uber Pool and Lyft Line were discontinued during the pandemic. Both Uber and Lyft made statements to NPR about their choices:

"Our goal is to help flatten the curve of community spread in the cities we serve," said Andrew Macdonald, an Uber executive. "We remain in close contact with local leaders and will continue to work with them to discourage nonessential travel."

A Lyft spokeswoman said: "The health and safety of the Lyft community is our top priority, and we're dedicated to doing what we can to slow the spread of COVID-19. We will continue to monitor the situation closely and base our actions on official guidance."

Lyft briefly brought back shared rides in 2021–only in select cities, and only with one other rider, making them ineligible for pre-tax transit benefits. Lyft eliminated the program entirely in 2023. Uber followed a similar trajectory–shared rides returned in 2022, but as UberX Share, ditching the SUVs and sticking to four passengers. This change still allows riders to save money by agreeing to be matched with other passengers, but makes the trip ineligible as a pre-tax transit commute.

For now, both Uber and Lyft are completely out of the commuter pre-tax world. In a world where bikes are once again included commuter benefits, like in The Bicycle Commuter Act (H.R.  3473/S. 1724), which would “create an $81/month pre-tax commuter benefit for biking or bike sharing to work,“ Lyft or Uber could include their bikesharing products, but for now–no, you can’t use your commuter benefits on Lyft or Uber. 


Ruth Miller

The Jawnt blog

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