What does pretax mean?

Here how a paycheck works:

• At work, an employee is paid money for the hours they work. The amount you get paid per hour is called your wage.

• On payday, you get the money for all the hours (and tips) that you work. This is called your gross pay or pretax pay.

  
  

• Before the money goes into your check, the government takes out payroll and income taxes.

  
  
• You get to keep whats left. This is your money to spend. This is called your after tax pay.

• "Pretax spending" means you can spend your wages before taxes come out. It means you can spend your money and the government's money, too.

• Use Alice to spend your pretax pay on parking and transit for your commute. You'll save about 20%. Taxes for the typical employee are about 20% of a paycheck. When you pay for parking and transit with Alice, you're going to save about 20% on parking and transit.

Here's more information:

The government usually doesn't let you spend your money before its taxes come out! But they want to help you pay for your commute! You can spend your pretax pay on parking and transit to get you to and from work.

The only way to spend the government's money on your commute is to do it through your commuter benefit through your employer. And, you can only spend it on transit or parking and not on gas or tolls.

The amount you save depends on your tax rate. Many people pay about 20% of their pay in taxes. Your tax rates depend on where you live, your income, and your family situation.

Think of it like a refund on your paycheck that you can’t get at tax time! That's right, there's nowhere on your annual tax return to claim expenses for your commute. Your employer helps you save by providing you with Alice, at no cost to you, so you can save on transit and parking to get to work!