More Washingtonians are using commute alternatives. However, fewer employers are requesting the tax
credit, and the credit likely has limited influence on the amount of financial
incentives employers provide.
November 2022
Executive Summary
Employers can request a B&O or public utility tax credit to reimburse a portion
of the financial incentives they pay for employees to use commute alternatives
Employers may claim a tax credit against the business and occupation (B&O) tax or
the public utility tax (PUT) for a portion of the financial incentives they provide
their employees to use commute alternatives. Qualifying commute alternatives are:
Ride sharing in vehicles with more than two people.
Using public transportation.
Using car sharing programs.
Using non-motorized commuting.
Telework is not listed as a commute alternative for which employers may request
Commute Trip Reduction (CTR) tax credits.
Employers can request a credit for up to 50% of the amount of financial incentives
paid, subject to several limits. In any fiscal year, the amount of credit may not
exceed: $60 per employee, $100,000 per employer, or $2.75 million statewide.
Employers must apply for the credit each year. If total credit applications exceed
$2.75 million, the Department of Revenue (DOR) must reduce each application by an
equal percentage to meet the cap.
The preference is scheduled to expire July 1, 2024.
More Washingtonians are using commute alternatives, but credit is likely of limited
influence
When the Legislature extended the preference in 2015, it added a performance
statement and mandated that JLARC review the CTR tax credit by the end of 2024. It
also directed the Legislative Auditor to recommend continuing the preference if
JLARC’s review finds an increase in the percentage of Washingtonians using commute
alternatives.
The Legislature stated two public policy objectives for the credit and both have been
met.
Stated Objectives
Results
Increase percentage of Washingtonians using commute alternatives.
Met. The share of Washingtonians using commute alternatives increased
from 27.5% to 29.2% between 2015 and 2019, and increased further during the
pandemic.
Reduce traffic congestion, automobile-related air pollution, and energy use
through employer-based commute trip reduction (CTR) programs.
Met. CTR survey data suggests improvements in congestion, pollution,
and energy use.
Although the policy objectives are met, the credit likely has limited influence on
the incentives that employers provide to their employees and, by extension, on these
objectives. JLARC staff found that fewer employers are currently requesting the credit
compared to prior years, with the largest drop among smaller employers. Employers are
paying more than the amount reimbursed through the credit and offer incentives for
other reasons, such as local mandates, recruitment and retention, and voluntary
sustainability efforts.
Recommendation
Legislative Auditor's Recommendation: Continue and Modify
The Legislature should continue and modify the preference. Although more
Washingtonians are using commute alternatives, the tax credit likely has limited
influence on the amount of incentives that employers provide and on employee use of
commute alternatives. Modifications to the credit might include:
Amending the preference to further reduce single-occupant vehicle travel.
The Legislature may consider options such as increasing the benefit for smaller
employers whose use of the preference has declined, targeting new employers, or
targeting employers outside of King County. The Legislature should consult with the
Department of Transportation when developing amendments. The Department’s expertise
in administering the Commute Trip Reduction program could help inform any
modifications.
Alternatively, the Legislature could recategorize the preference as one
intended to provide tax relief to employers providing financial incentives
for commute alternatives. If the Legislature chooses to do so, it should
consider changing its objective from increasing use of commute alternatives to one
that focuses on increasing the number of businesses receiving tax relief for
providing incentives to their employees.
WSDOT concurs with this recommendation. You can find more information in Recommendations.
Commissioners' Recommendation
Endorse the Legislative Auditor's recommendation with comment. Increasing commute
alternatives, decreasing traffic congestion, and decreasing energy use and air
pollution are becoming more important to our state for quality of life and
sustainability. Traffic congestion and energy use is not solely a Puget Sound corridor
issue; Eastern Washington and rural communities can all benefit from reducing
single-occupant travel.
Committee Action to Distribute Report
On November 30, 2022 this report was approved for distribution by the Joint
Legislative Audit and Review Committee.
Action to distribute this report does not imply the Committee agrees or disagrees
with the Legislative Auditor recommendations.
22-05 Final Report: Commute Trip Reduction
November 2022
REVIEW Details
1. Tax credit for providing commute alternative incentives
Employers can request a B&O or public utility tax credit to
reimburse a portion of the financial incentives they provide employees to use commute
alternatives
The credit reimburses employers that provide their employees incentives to use
commute alternatives
EmployersThis report collectively
refers to credit users as "employers." Property managers may also claim the credit
for financial incentives they provide to employees at worksites they manage.
may claim a tax credit against their business and occupation
(B&O) tax or public utility tax (PUT) liability for a portion of the financial
incentives they provide their employees to use commute alternatives. Qualifying
commute alternatives are:
Ride sharing in vehicles with more than two people.
Using public transportation.
Using car sharing programs.
Using non-motorized commuting.
Telework is not listed as a commute alternative for which employers may request
Commute Trip Reduction (CTR) tax credits.
Employers can claim the credit as long as they offer financial incentives to their
employees. These may include paying for all or a portion of the costs of public
transportation, providing cash prizes, or offering additional paid leave. Employees
who receive the incentives are not required to use commute alternatives.
Credit is subject to several limits, including a statewide cap of $2.75 million
To claim the credit, employers must submit an application to the Department of
Revenue (DOR) in January following the year in which they provided the incentives. The
credit is equal to 50% of the amount they paid in financial incentives, subject to
several limits. In any fiscal year, the amount of credit may not exceed:
$60 per employee.
$100,000 per employer.
$2.75 million statewide.
If total credit applications exceed $2.75 million, DOR must reduce each application
by the same percentage so that the total credit awarded does not exceed the statewide
cap (see section 2 for discussion of CTR tax credit usage).
The credit is not refundable, meaning it can only reduce taxes owed, but cannot
result in a tax refund. If employers owe less in taxes than anticipated, they may not
be able to claim the full amount of the credit they were allocated. The credit cannot
be carried forward to future years.
Employers who claim the CTR tax credit are not required to submit an annual tax
performance report.
Exhibit 1.1: Employers apply for credit in January for incentives they paid the
prior year
Source: JLARC staff analysis of statute.
Preference first enacted in 1994, scheduled to expire July 1, 2024
The Legislature created a tax credit for commute trip reduction expenses in 1994 and
has extended and amended it several times since. Changes include:
Extensions and expirations: First extended in 1996, the credit expired in 2000,
was reinstated in 2003, and extended again in 2015. It is now scheduled to expire
July 1, 2024.
Amendments to credit limits: In 2005, the Legislature began requiring DOR to
prorate applications if the total amount requested exceeded $2.75 million. Until
then, the credit was available on a first-in-time basis. In 2015, the per employer
cap was reduced from $200,000 to $100,000.
Legislative goals are to reduce traffic congestion, automobile-related air
pollution, and energy use by increasing use of commute alternatives
The Legislature added a tax preference performance statement in 2015 and directed
JLARC to review the CTR tax credit by December 2024. The goals for the credit are to
increase the percentage of Washingtonians using commute alternatives and to
reduce:
Traffic congestion.
Automobile-related air pollution.
Energy use.
The Legislature directed the Legislative Auditor to recommend continuing the
preference if the review finds that there has been an increase in the percentage of
Washingtonians using commute alternatives.
CTR tax credit is distinct from Commute Trip Reduction program, but they overlap in
several ways
Washington's CTR program was enacted before the CTR tax credit. The CTR program is
required of employers located within certain urban growth areas that meet specific criteria.Have 100 or more
employees at a single worksite who begin their work day between 6-9 am.
In contrast, employers who use the tax credit do so voluntarily. It
is intended to encourage employers to provide financial incentives to their employees.
Some employers participate in both programs, but employers are not required to have a
CTR program in order to claim the tax credit.
The CTR program and the tax credit overlap in several ways. The Legislature directed
JLARC to use survey data from the CTR program to determine the impact of the tax
credit and whether more Washingtonians are using commute alternatives (see section
4 for more details). The focus of this report is on the CTR tax credit.
Exhibit 1.2: Comparison of the Commute Trip Reduction Program and the CTR tax
credit
Characteristic
CTR Program
Tax Credit
Year enacted
1991
1994
Legislative goals
Ease congestion
Improve air quality
Reduce gasoline consumption
Reduce traffic congestion
Reduce automobile-related air pollution
Reduce energy use
Administering agency
Washington Department of Transportation (WSDOT)
Washington Department of Revenue (DOR)
Who participates?
Certain jurisdictionsCounties with urban growth area (UGA), cities within UGA with a state
highway segment exceeding a traffic delay threshold, and counties and
cities located in contiguous UGAs. must develop CTR plans
and adopt ordinances
Major employersPrivate or
public employers with 100 or more full-time employees at a single
worksite who begin work between 6:00-9:00 am on weekdays for 12
continuous months during year. within these jurisdictions
are required to adopt their own CTR programs
Smaller employers may elect to participate
Employers of any size can apply if they provide financial incentives to
their employees
Requirements
Major employers must:
Designate an employee transportation coordinator.
Regularly distribute information to employees regarding commute
alternatives.
Issue surveys every two years to measure the vehicle miles traveled and
commute mode choices of their employees.
Submit survey results to WSDOT and participating jurisdictions.
Participating employers must:
Provide their employees with financial incentives to encourage use of
commute alternatives.
Submit application for tax credit to DOR.
22-05 Final Report: Commute Trip Reduction
November 2022
REVIEW Details
2. Fewer employers are requesting credit
The number of employers requesting a credit has declined,
especially among smaller employers. Before the pandemic, the total amount of credit
requested exceeded the state cap each year.
The number of credit applicants has declined, mainly among smaller employers
The number of employers applying for the credit declined between 2016 and 2020. A
total of 669 employers applied for the credit in 2016. By 2020, this number dropped by
56% to 297.
During the COVID-19 pandemic, the number of employers requesting the CTR tax credit
continued to fall. Because applications in one year reflect incentives paid in the
previous year, the impacts of the pandemic are reflected in years 2021 and 2022, with
a drop to 195 and 166 applications, respectively.
Exhibit 2.1: Credit applications declined sharply between 2016 and 2022 while total
employment remained more steady
Source: JLARC staff analysis of CTR tax credit application data.
While the total number of applicants declined, the total number of employees covered
in the applications was more stable. The decline in applications for the credit was
concentrated among smaller employers. Between 2016 and 2020, the smaller employers had
the largest percentage drop in applications:
Employers with fewer than 50 employees declined by 254 (64%).
Employers with 50-250 employees declined by 100 (56%).
Employers with 250-1,666This is
the maximum number of employees that an employer can claim for the tax credit
(at $60 per employee) before reaching the employer cap of $100,000.
employees declined by 11 (15%).
Employers with more than 1,666 employeesIn this report, these are referred to as "large
employers." declined by 7 (30%).
During 2021 and 2022, the number of applicants fell for both large and small
employers, likely due to the impact of the COVID-19 pandemic.
Exhibit 2.2: Smaller employers had the largest drop in applications
Source: JLARC staff analysis of CTR tax credit application data.
Before the pandemic, credit requests exceeded the state cap each year
Between 2016 and 2020, the amount of credit requested exceeded the $2.75 million cap
each year, and DOR was therefore required to prorate applications. During this time,
employers reported paying between $24.7 million and $19.3 million per year in
incentives to between 227,000 and 190,000 employees. Based on these incentive
payments, employers:
Requested between $5.7 million and $4.3 million in credits, reflecting the per
employer and per employee limits.
Received between 48% and 64% of the amount they requested.
As the number of applications declined during the pandemic, so did the amount by
which DOR had to reduce credit awards.
In 2021, employers received 86% of the amount they requested in credits.
In 2022, DOR did not have to prorate applications because the amount requested did
not exceed the state cap.
Exhibit 2.3: Credit requests exceeded $2.75 million cap until 2022
Source: JLARC staff analysis of CTR tax credit application data.
King County employers claim the majority of credits
An analysis of employer records suggests that beneficiaries of the CTR tax credit are
concentrated in King County. Between 2016 and 2020, an average of 410 employers
claimed the CTR tax credit and 83% of them have King County addresses. The King County
employers also claimed 83% of the credits and employed 86% of employees reported on
credit applications.
Some employers do not claim the full amount of credit they are allocated
Although DOR allocated $2.75 million in credit to applicants through 2021, not all of
the applicants claimed their full credit allocation. Between 2017 and 2020, employers
claimed an average $2.5 million of the $2.75 million allocated, or 91%. If employers
owe less in taxes than the value of the credit they were awarded, they cannot claim
the full amount they were allocated.
Exhibit 2.4 shows JLARC staff's estimate of beneficiary savings from the tax credit.
Estimates for future years are based on the recent history of credit requests,
including the following assumptions:
Employers will continue to request less than the full $2.75 million in credits in
fiscal years 2022 and 2023.
Employers will again request the full amount in fiscal year 2024, several years
after the start of the pandemic. The preference is scheduled to expire July 1, 2024.
B&O tax credit claims will make up 94% of applicants and PUT claims will be 6%
of applicants.
91% of allocated credits will be claimed.
Exhibit 2.4: Estimated beneficiary savings in the next two biennia are below $2.75
million annual state cap
Biennium
Fiscal Year
B&O Tax
CTR Credit
PUT
CTR Credit
Total Estimated
Beneficiary Savings
2021-23
7/1/21-6/30/23
2022
$1,800,000
$110,000
$1,910,000
2023
$2,100,000
$120,000
$2,220,000
2023-25
7/1/23-6/30/25
2024
$2,400,000
$140,000
$2,540,000
2025
$0
$0
$0
2025-27
7/1/25-6/30/27
2026
$0
$0
$0
2027
$0
$0
$0
Estimated 2025-2027 Biennial Savings
$0
$0
$0
Source: JLARC staff analysis of DOR tax return data. Preference is scheduled to
expire July 1, 2024.
22-05 Final Report: Commute Trip Reduction
November 2022
Review Details
3. Credit likely has limited influence
The tax credit likely has limited influence on the incentives
provided. Employers pay more than the amount reimbursed through the credit and offer
incentives for other reasons.
When the Legislature extended the preference in 2015, it stated that the preference
encourages employers to offer their employees financial incentives to use commute
alternatives. JLARC staff identified several factors that suggest the tax credit has
limited influence on the amount of incentives employers offer.
The credit reimburses an average of 6% of incentive payments reported by large
employers, and 30% for smaller employers
From 2016-2022, employers were reimbursed for a fraction of the amount they paid in
financial incentives. As discussed in section
2, there are several statutory limits on the amount of credit employers can
receive:
50% of the amount paid for incentives.
$60 per employee.
$100,000 per employer.
$2.75 million state cap.
These limits have impacted large and small employers in different ways. The
per-employer credit cap affects a small group of employers with more than 1,666
employees (see box). These large employers represent just 5% of the applicant pool, but
73% of the employees reported on CTR tax credit applications between 2016 and 2022.
Why 1,666 employees?
Employers can apply for up to $60 per employee.
Credit claims are capped at $100,000 per employer.
1,666 is the maximum possible number of employees before reaching the $100,000
cap.
Fewer small employers are requesting the credit despite benefitting from a higher
reimbursement rate
From 2016-22, large employers were awarded an average of $900,000 in CTR tax credits
per year, which reimbursed 6% of the $14.5 million in reported annual incentive
payments.
Smaller employersEmployers with fewer
than 1,666 employees. are not affected by the per-employer cap. As a
result, the credit reimburses a greater share of the incentives they report paying to
employees. During the same period, they averaged $1.8 million in credits, reimbursing
30% of the average $5.9 million they paid in incentives.
Exhibit 3.1: Large employers are reimbursed for less of their costs than smaller
employers
Source: JLARC staff analysis of CTR tax credit application data (2016-2022
average).
As discussed in section
2, the number of credit applicants declined 56% from 2016 to 2020. Further, the
decline is concentrated among smaller employers not subject to the per-employer cap. The
number of employers with fewer than 250 employees declined by 62% between 2016-20,
despite the relatively higher reimbursement rate when compared to large employers. These
trends suggest the value of the credit may have limited influence on employer decisions
about offering incentives.
Employers report spending more on employee incentives than they request in
credits
The
ORCA Business Passport is a comprehensive, annual transportation pass program
for employers with 5 or more employees in the greater Puget Sound area.
Employers must cover 50%Most
employers report covering 100% of the cost. of the cost for
all benefit-eligible staff.
Businesses with over 500 employees can customize their transportation pass
program, allowing them to opt out of certain services.
Employers can report spending up to $120 per employee on the CTR tax credit
applications. JLARC staff analysis found that employers provide financial incentives
beyond what they report. This suggests that the actual reimbursement rate for large and
small employers is less than 6% and 30%, respectively.
JLARC staff surveyed employers that applied for the credit in 2019. Respondents
reported spending an average of $335 per employee on commute trip reduction incentives,
with 85% of respondents spending more than $120 per employee. JLARC staff asked if the
CTR tax credit increased the amount of financial incentives provided to employees:
20% of survey respondents stated the credit increased the amount of incentives they
offer.
49% stated the credit was not a factor.
31% were uncertain if it was a factor.
JLARC's survey results are supported by data from King County's ORCAOne Regional Card for All. Business
Passport program (see box) which indicates that employers spent more than three times
the amount for which they could request credit. In 2020, 455 employers with between
5-500 employees spent an average of $383 per employee on transit passes. This total
includes 34 employers that requested the credit.
Exhibit 3.2: Employers paid an average of $383 per employee for the ORCA Business Passport program in 2020
Source: JLARC staff analysis of King County Metro Transit data.
Employers with 500 or more employees with ORCA customized transportation pass programs
also spend more on transit than can be reimbursed by the credit. In 2019, 58 such
private employers, including 29 that requested the credit, spent $53 million on ORCA
passports, nearly 20 times the statewide credit cap of $2.75 million.
Employers offer incentives for reasons unrelated to the tax credit
The data above indicates that employers are spending more on incentives than can be
reimbursed by the CTR tax credit. There are other reasons employers choose to offer
incentives that are unrelated to the tax credit:
Local mandates: Seattle modified its CTR law in 2019 to require worksites
with 100 or more employees to provide financial incentives for commute
alternatives.
Recruitment and retention: Commute incentives are often part of employee
compensation packages and may include benefits outside the scope of the CTR tax credit
(e.g., reimbursement for bicycle purchases).
Sustainability and traffic demand management: Employers use commute
incentives to reduce their carbon footprints and manage vehicle traffic around their
campuses. The University of Washington, for example, is required to limit the number
of vehicles on campus through an agreement with the city of Seattle.
22-05 Final Report: Commute Trip Reduction
November 2022
Review Details
4. Fewer Washingtonians drive to work alone
The share of Washingtonians using commute alternatives increased
from 27.5% to 29.2% between 2015 to 2019, though it is unclear how much the CTR program
and the credit contributed to this change
The Legislature stated two main goals for the tax credit in its performance statement:
1. Increase the percentage of Washingtonians using commute alternatives.
2. Reduce traffic congestion, automobile-related air pollution, and energy use by
changing the way employees commute to work.
Data from the U.S. Census and from the Washington Department of Transportation's CTR
program indicate these policy objectives are being met. These data sources include both
credit users and nonusers and identify trends in the use of commute alternatives and the
impact of those trends on the environment.
U.S. Census and CTR survey data show that more Washingtonians are using commute
alternatives
Two related data sources show that Washingtonians are using commute alternatives more
frequently than in the past.
American Community Survey data compiled by the U.S. Census Bureau shows the use of
commute alternatives among all Washingtonians.
WSDOT's Commute Trip Reduction program survey data shows use of commute alternatives
among CTR program participants.
American Community Survey: More residents across the state are using commute
alternatives
Survey data shows Washington's use of commute alternatives, including teleworkTelework is considered a commute
alternative in the survey data, but it is not a reimbursable expense for the tax
credit., is ahead of the national average. The percentage of
Washingtonians commuting to work by a means other than driving alone increased by 1.7
percentage points between 2015 and 2019. During this same period, the measure for the
country as a whole also improved, but by a relatively smaller margin (0.7 percentage
points).
Because the COVID-19 pandemic complicated its survey methodology, the American
Community Survey published experimental data for 2020 and cautioned against comparing to
prior years. Due to this caution, 2020 data is not included in Exhibit 4.1, below. The
experimental data does suggest the use of commute alternatives, including telework,
increased sharply in 2020 – to 37.2% in Washington, and to 31% in the rest of the
country.
Exhibit 4.1: More Washingtonians are using commute alternatives each year
Source: JLARC staff analysis of American Community Survey 1-year estimates.
CTR Employee Survey: Employees at CTR worksites are more likely to use commute
alternatives than the average employee statewide
The tax preference performance statement directs JLARC to use WSDOT's Commute Trip
Reduction Program survey data to analyze whether more Washingtonians are using commute
alternatives. Employees at CTR worksites are asked to complete surveys every two years
about the way they travel to work.
The survey responses show an increase in the use of commute alternatives at CTR
worksites and indicate employees at those sites use commute alternatives at a higher
rate than the state average. The share of respondents using commute alternatives,
including teleworkTelework is considered
a commute alternative in the survey data, but it is not a reimbursable expense for
the tax credit., has increased over the past three survey cycles, with
a steep increase at the onset of the COVID-19 pandemic. WSDOT reports that the increase
in 2019/20 likely reflects the increasing number of employees who began teleworking.
Exhibit 4.2: More employees at CTR sites are using commute alternatives, especially
during the pandemic
*2019-20 survey cycle includes the start of the COVID-19 pandemic and represents
responses from fewer CTR sites. Source: JLARC staff analysis of WSDOT - CTR
employee survey data.
CTR survey data suggests improvement in CTR program goals for traffic congestion, air
quality, and gasoline consumption
JLARC staff further analyzed CTR employee survey data to identify:
Characteristics of participating employers.
Impact of CTR program on goals of easing congestion, improving air quality, and
reducing gasoline consumption. The goals of the CTR program are almost identical to
the goals for the tax credit.
Click the map image below to access an interactive dashboard that provides CTR-site
detail by location.
In 2015-16 and 2017-18, more than 900 CTR worksites responded to the survey, reporting
more than 560,000 employees. Fewer CTR work sites responded as the COVID-19 pandemic
began. Data for the 2019-20 survey cycle reflects 800 CTR sites, and just over 500,000
employees.
JLARC staff compared the CTR sites to employers that claimed a CTR tax credit. Among
2017-18 respondents to the CTR employee survey, 30% were from worksites where the
employers claimed the tax credit. These sites tended to be larger employers and
represented 52% of all employees working at CTR sites.
Exhibit 4.3: Tax credit beneficiaries represent 30% of CTR sites, 52% of
employees
Claimed Tax Credit
Did Not Claim Credit
CTR Sites
277 (30%)
660 (70%)
Employees
313,398 (52%)
284,388 (48%)
Source: JLARC staff analysis of DOR - tax return data and WSDOT - CTR employee survey
data from 2017-18.
Based on responses to the CTR survey, JLARC staff calculated statewide measures of
annual vehicle-miles traveled, fuel consumed, and greenhouse gases emitted. Exhibit 4.6
shows these estimates and how commute alternatives have resulted in an overall reduction
in each of these measures. The estimated decline in vehicle miles traveled equates to an
annual reduction of 15 gallons of fuel consumed and 0.13 metric tons of greenhouse gases
emitted per employee from 2015-16 to 2017-18.
Exhibit 4.4: Survey results for all CTR sites indicate a per-employee reduction in
miles traveled, fuel consumed, and carbon emissions
Survey Cycle
Vehicle-miles traveled
(miles)
Fuel consumed
(gallons)
CO2 Emissions
(metric tons)
Change from
prior cycle
2015-16
4,645
217
1.95
2017-18
4,326
202
1.82
↓
2019-20*
3,359
157
1.41
↓
*2019-20 survey cycle includes the start of the COVID-19 pandemic and represents
responses from fewer CTR sites. Source: JLARC staff analysis of WSDOT - CTR
employee survey data.
CTR programs may reduce negative impacts of commuting, but it is difficult to measure
the influence of Washington's CTR program or the CTR tax credit
The Legislature directed JLARC to use the CTR survey data to analyze whether the tax
credit helped to reduce traffic congestion, air pollution, and energy use. While the
survey results show reductions across these measures, it is difficult to know the extent
to which the tax credit influenced those reductions. The CTR survey data is a sample of
commuters who may or may not work for employers claiming the tax credit. They also may
not be representative of the state as a whole. National research indicates that the
influence of commuting behavior is most effectively measured on a local level. The
effects of some commute reduction strategies may be heavily determined by whether:
Public transit is widely available.
Parking is limited and fee-based.
Other activities and services can be reached from worksites without a personal
vehicle.
For these reasons, it is unclear to what extent the CTR program and tax credit
influenced the overall reduction in congestion, pollution, and energy use.
22-05 Final Report: Commute Trip Reduction
November 2022
Review Details
5. Applicable statutes
RCW 82.70 and tax preference performance statement
Definitions. (Expires July 1, 2024.)
RCW 82.70.010
The definitions in this section apply throughout this chapter and *RCW 70.94.996
unless the context clearly requires otherwise.
(1) "Applicant" means a person applying for a tax credit under this chapter.
(2) "Car sharing" means a membership program intended to offer an alternative to car
ownership under which persons or entities that become members are permitted to use
vehicles from a fleet on an hourly basis.
(3) "Nonmotorized commuting" means commuting to and from the workplace by an employee
by walking or running or by riding a bicycle or other device not powered by a motor.
(4) "Public agency" means any county, city, or other local government agency or any
state government agency, board, or commission.
(5) "Public transportation" means the same as "public transportation service" as
defined in RCW 36.57A.010 and includes passenger services of the Washington state
ferries.
(6) "Ride sharing" means the same as "ride sharing" as defined in RCW 46.74.010,
including ride sharing on Washington state ferries.
(7) "Telework" means a program where work functions that are normally performed at a
traditional workplace are instead performed by an employee at his or her home at least
one day a week for the purpose of reducing the number of trips to the employee's
workplace.
Tax credit authorized. (Expires July 1, 2024.)
RCW 82.70.020
(1) Employers in this state who are taxable under chapter 82.04 or 82.16 RCW and
provide financial incentives to their own or other employees for ride sharing, for
using public transportation, for using car sharing, or for using nonmotorized
commuting before January 1, 2024, are allowed a credit against taxes payable under
chapters 82.04 and 82.16 RCW for amounts paid to or on behalf of employees for ride
sharing in vehicles carrying two or more persons, for using public transportation, for
using car sharing, or for using nonmotorized commuting, not to exceed sixty dollars
per employee per fiscal year.
(2) Property managers who are taxable under chapter 82.04 or 82.16 RCW and provide
financial incentives to persons employed at a worksite in this state managed by the
property manager for ride sharing, for using public transportation, for using car
sharing, or for using nonmotorized commuting before January 1, 2024, are allowed a
credit against taxes payable under chapters 82.04 and 82.16 RCW for amounts paid to or
on behalf of these persons for ride sharing in vehicles carrying two or more persons,
for using public transportation, for using car sharing, or for using nonmotorized
commuting, not to exceed sixty dollars per person per fiscal year.
(3) The credit under this section is equal to the amount paid to or on behalf of each
employee multiplied by fifty percent, but may not exceed sixty dollars per employee
per fiscal year. No refunds may be granted for credits under this section.
(4) A person may not receive credit under this section for amounts paid to or on
behalf of the same employee under both chapters 82.04 and 82.16 RCW.
(5) A person may not take a credit under this section for amounts claimed for credit
by other persons.
This section is the tax preference performance statement for the tax preference
contained in RCW 82.70.020. This performance statement is only intended to be used for
subsequent evaluation of the tax preference. It is not intended to create a private
right of action by any party or be used to determine eligibility for preferential tax
treatment.
(1) The legislature categorizes this tax preference as one intended to induce certain
designated behavior by taxpayers as indicated in RCW 82.32.808(2)(a).
(2) It is the legislature's specific public policy objective to reduce traffic
congestion, automobile-related air pollution and energy use through employer-based
programs that encourage the use of alternatives to the single-occupant vehicle
traveling during peak traffic periods for the commute trip. It is the legislature's
intent to extend the commute trip reduction tax credit, which encourages employers to
provide financial incentives to their employees for using ride sharing, public
transportation, car sharing, or nonmotorized commuting. Pursuant to chapter 43.136
RCW, the joint legislative audit and review committee must review the commute trip
reduction tax credit established under RCW 82.70.020 by December 1, 2024.
(3) If a review finds that the percentage of Washingtonians using commute
alternatives is increasing, then the legislature intends for the legislative auditor
to recommend extending the expiration date of the tax preferences.
(4) In order to obtain the data necessary to perform the review in subsection (3) of
this section, the joint legislative audit and review committee should refer to the
office of financial management's results Washington sustainable transportation
performance metric or data used by the department of transportation's commute trip
reduction program.
Application for tax credit. (Expires July 1, 2024.)
RCW 82.70.025
(1) Application for tax credits under this chapter must be received by the department
between the first day of January and the 31st day of January, following the calendar
year in which the applicant made payments to or on behalf of employees for ride
sharing in vehicles carrying two or more persons, for using public transportation, for
using car sharing, or for using nonmotorized commuting. The application must be made
to the department in a form and manner prescribed by the department. The application
must contain information regarding the number of employees for which incentives are
paid during the calendar year, the amounts paid to or on behalf of employees for ride
sharing in vehicles carrying two or more persons, for using public transportation, for
using car sharing, or for using nonmotorized commuting, and other information required
by the department.
(2) The department must rule on the application within sixty days of the deadline
provided in subsection (1) of this section.
(3)(a) The department must disapprove any application not received by the deadline
provided in subsection (1) of this section except that the department may accept
applications received up to fifteen calendar days after the deadline if the
application was not received by the deadline because of circumstances beyond the
control of the taxpayer.
(b) In making a determination whether the failure of a taxpayer to file an
application by the deadline was the result of circumstances beyond the control of the
taxpayer, the department must be guided by rules adopted by the department for the
waiver or cancellation of penalties when the underpayment or untimely payment of any
tax was due to circumstances beyond the control of the taxpayer.
(4) After an application is approved and tax credit granted, no increase in the
credit is allowed.
(5) To claim a credit under this chapter, a person must electronically file with the
department all returns, forms, and other information the department requires in an
electronic format as provided or approved by the department. Any return, form, or
information required to be filed in an electronic format under this section is not
filed until received by the department in an electronic format. As used in this
subsection, "returns" has the same meaning as "return" in RCW 82.32.050.
False statement in application—Penalty. (Expires July 1, 2024.)
RCW 82.70.030
Any person who knowingly makes a false statement of a material fact in the
application required under RCW 82.70.025 for a credit under RCW 82.70.020 is guilty of
a gross misdemeanor.
Tax credit limitations. (Expires July 1, 2024.)
RCW 82.70.040
(1)(a) The department must keep a running total of all credits allowed under RCW
82.70.020 during each fiscal year. The department may not allow any credits that would
cause the total amount allowed to exceed $2,750,000 in any fiscal year.
(b) If the total amount of credit applied for by all applicants in any year exceeds
the limit in this subsection, the department must ratably reduce the amount of credit
allowed for all applicants so that the limit in this subsection is not exceeded. If a
credit is reduced under this subsection, the amount of the reduction may not be
carried forward and claimed in subsequent fiscal years.
(2)(a) Tax credits under RCW 82.70.020 may not be claimed in excess of the amount of
tax otherwise due under chapter 82.04 or 82.16 RCW.
(b) Through June 30, 2005, a person with taxes equal to or in excess of the credit
under RCW 82.70.020, and therefore not subject to the limitation in (a) of this
subsection, may elect to defer tax credits for a period of not more than three years
after the year in which the credits accrue. For credits approved by the department
through June 30, 2015, the approved credit may be carried forward and used for tax
reporting periods through December 31, 2016. Credits approved after June 30, 2015,
must be used for tax reporting periods within the calendar year for which they are
approved by the department and may not be carried forward to subsequent tax reporting
periods. Credits carried forward as authorized by this subsection are subject to the
limitation in subsection (1)(a) of this section for the fiscal year for which the
credits were originally approved.
(3) No person may be approved for tax credits under RCW 82.70.020 in excess of
$100,000 in any fiscal year. This limitation does not apply to credits carried forward
from prior years under subsection (2)(b) of this section.
(4) No person may claim tax credits after June 30, 2024.
Fund transfer. (Expires January 1, 2025.)
RCW 82.70.050
The director must on the 25th of February, May, August, and November of each year
advise the state treasurer of the amount of credit taken under RCW 82.70.020 during
the preceding calendar quarter ending on the last day of December, March, June, and
September, respectively.
Commute trip reduction board. (Expires July 1, 2024.)
RCW 82.70.060
The commute trip reduction board must determine the effectiveness of the tax credit
under RCW 82.70.020 as part of its ongoing evaluation of the commute trip reduction
law. The department must provide requested information to the commute trip reduction
board for its assessment.
Administration. (Expires July 1, 2024.)
RCW 82.70.070
Chapter 82.32 RCW applies to the administration of this chapter.
Expiration of chapter. (Expires July 1, 2024.)
RCW 82.70.900
Except for RCW 82.70.050, this chapter expires July 1, 2024.
22-05 Final Report: Commute Trip Reduction
November 2022
Recommendations & Responses
Legislative Auditor's Recommendation
The Legislative Auditor recommends continuing and modifying the
preference
The Legislature should continue and modify the preference. Although more
Washingtonians are using commute alternatives, the tax credit likely has limited
influence on the amount of incentives that employers provide and on employee use of
commute alternatives. Modifications to the credit might include:
Amending the preference to further reduce single-occupant vehicle travel.
The Legislature may consider options such as increasing the benefit for smaller
employers whose use of the preference has declined, targeting new employers, or
targeting employers outside of King County. The Legislature should consult with the
Department of Transportation when developing amendments. The Department’s expertise
in administering the Commute Trip Reduction program could help inform any
modifications.
Alternatively, the Legislature could recategorize the preference as one
intended to provide tax relief to employers providing financial incentives
for commute alternatives. If the Legislature chooses to do so, it should
consider changing its objective from increasing use of commute alternatives to one
that focuses on increasing the number of businesses providing incentives to their
employees.
Legislation Required: Yes
Fiscal Impact: Depends on legislation. Impact could be up to $5.5 million per
biennium if the credit is extended as currently structured.
Agency Response:WSDOT concurs with this recommendation.
22-05 Final Report: Commute Trip Reduction
November 2022
Recommendations & Responses
Letter from Commission Chair
22-05 Final Report: Commute Trip Reduction
November 2022
Recommendations & Responses
Commissioners' Recommendation
The Commission endorses the Legislative Auditor's recommendation
with comment. Increasing commute alternatives, decreasing traffic congestion, and
decreasing energy use and air pollution are becoming more important to our state for
quality of life and sustainability. Traffic congestion and energy use is not solely a
Puget Sound corridor issue; Eastern Washington and rural communities can all benefit
from reducing single-occupant travel.
22-05 Final Report: Commute Trip Reduction
November 2022
Recommendations & Responses
DOR & OFM Response
22-05 Final Report: Commute Trip Reduction
November 2022
Recommendations & Responses
WSDOT Response
22-05 Final Report: Commute Trip Reduction
November 2022
More about this review
Study questions
Click image to view PDF of proposed study questions
