Are commuter benefits taxed if I leave them unspent?

No. Unspent §132(f) commuter benefits are not taxed as income at year-end. They also can't be refunded to you in cash. The IRS does not allow a cash-out of unused commuter dollars. That is the trade-off for the tax break.

How "use it or leave it" works

Commuter benefits don't expire like FSA dollars at year-end. Unspent balances generally carry forward month to month as long as you remain employed at the same employer and the plan permits it.

What happens at year-end

If you have a balance on December 31 and you're still employed, it generally rolls into January. It does not become taxable income. You don't claim it as anything on your tax return.

What happens if you leave the plan

If you change jobs or your employer ends the plan, you usually get a short window to use the money on commute costs you already had. Any balance after that window is forfeited. It is not paid out to you, and it is not added back to your taxable wages.

Why this matters for planning

Estimate conservatively. Don't elect $340/month if your actual commute costs $150/month. Election flexibility varies by administrator. With Alice you can change your election each pay period, not once a year.

What you already kept

Even if you leave a small balance behind, you've already captured the tax savings on every dollar you spent. The forfeit only applies to the unused portion.

Need help?

Text or call (888) 431-4355 or email support@thisisalice.com.

Savings shown or implied, including any reference to "cash back" or take-home pay, are illustrative. Actual savings depend on your tax rate, benefit elections, and eligible spending each pay period. "Cash back" in Alice's materials refers to the federal, state, and FICA payroll taxes you don't pay on eligible commuter spending. It is income tax you keep, not a cash payment from Alice, your employer, or any third party. Alice does not provide cash back, rebates, or any direct financial benefit in connection with the Program. Alice does not provide tax, legal, or financial advice. Consult your own tax preparer, lawyer, or financial advisor for guidance specific to your situation.

Figures shown are for the 2026 plan year and are set by the IRS. Limits are indexed annually by the IRS.

Specific benefits, election rules, and run-out periods depend on your employer's plan design. Check with your HR team or plan administrator for details.