What Does it Cost?

Riders standing next to Vanpool

Vanpooling is popular for its convenience, its contribution to a cleaner environment and its reasonable cost. Vanpooling is the most cost-effective way to get to work – about $6 a day – given a daily roundtrip commute of at least 40 miles and a 21-workday month.

Vanpool Riders Share Expenses

Fares are based on the number of average monthly miles and the costs of operation, maintenance, insurance and vehicle depreciation. Monthly costs per rider, based on 14 passengers, are generally between $90 and $170 a month.

A Vanpool Driver/Coordinator Leases the Van

Leases are issued on a 30-day, renewable program. A typical lease ranges from $1,000 to $1,500 per month, depending on the van and your monthly mileage. The lease includes maintenance, insurance and 24-hour Roadside Assistance.

This chart shows the cost of leasing and operating a vanpool, excluding tolls,
based on the following assumptions:

Cost of Leasing & Operating a Vanpool
2010
7-Passenger
Toyota Sienna
2010
9-Passenger
Luxury Hi Back
Seating
2010
12 or 14
Passenger Luxury
Hi Back Seating
2010
15-Passenger
Bench Seating
Vehicle Mileage Per Gallon 18mpg 14mpg 12mpg 12mpg
Monthly Gas Cost

$261 $336 $392 $392
Monthly Lease Cost $1,060 $1,180 $1,350 $1,220
Total Cost (Lease & Gas) $1,321 $1,516 $1,742 $1,612

Riders standing next to Vanpool

Financial Incentives

Employer Subsidies

Check with your employer to see if they currently offer subsidies for vanpooling. Employers can offer their employees up to $125 in tax-exempt dollars per month towards vanpool or transit expenses, saving employers on payroll taxes and providing a write-off at the end of the year.

Tax Benefits

The federal Commuter Tax Benefit (formally known as the Qualified Transportation Fringe Benefit or Section 132(f) benefit) currently allows employees to use up to $125 a month, or $1,500 a year, of their pre-tax salary to pay for their commuting expenses. Using pre-tax money to pay for vanpooling lowers your total tax burden, and allows your employer to save money on payroll taxes.

NJ Transit's Vanpool Sponsorship Program

To reduce traffic congestion, NJ Transit encourages vanpooling by providing:

To qualify for subsidies, you must:

EZ Ride's Empty-Seat Subsidy

To encourage formation of new vanpools, EZ Ride provides $60 a month for an empty seat for the first 3 months, providing a financial cushion while passengers are recruited.

Emergency Ride Home

In the event of an emergency, vanpoolers can get a free ride home up to three times a year, a potential value of $330.

Riders standing next to Vanpool

Tax Benefits

Tax Benefits for the Employee

In the chart below, each column to the right shows the tax benefit for employees in three cases:

Employees Value Employee pays 100% Employer pays 100% 50%/50% split
Base Amount $1,500 $1,500 $750
Federal Marginal Income Tax Bracket Savings @25% $375 $375 $187.5
FICA TAX Saved (7.65%) $115 $115 $58
State Marginal Income Tax Bracket Savings @5.525% $83 $83 $41
True Transit Benefit Cost $2,073 $2,073 $1,036
Annual Transit Benefit Savings $573 $286

Tax Benefits for the Employer

The following three scenarios show the tax benefits to employers based on:

Scenario 1 - Employee pays 100%

illustration of employee and employer

Employees Impact Employer
Base Amount $1,500
FICA Tax Saved (7.65%) $115
Total Employer Payroll Tax Saved $115

Scenario 2 - Employer pays 100%

illustration of employee and employer

Employees Impact Private Employer Non Profit or Federal Employer
Base Amount $1,500 $1,500
FICA Tax Saved (7.65%) $115 $115
Less 30% Fed/State Tax Deduction $450 $0
True Cost to Employer $935 $1,385
Employer Savings $565 $115

Scenario 3 - 50%/50% Split

illustration of employee and employer

Employees Impact Private Employer Non Profit or Federal Employer
Base Amount $750 $750
Employer FICA Saved Based On Employee (7.65%) $57 $57
Less 30% Fed/State Tax Deduction $225 $0
True Cost to Employer $468 $693
Employer Savings $282 $57
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