Employees appreciate this benefit and there's a bonus for your company: You can save money on payroll taxes. Similar to a cafeteria plan election, staff members can have money deducted on a pre-tax basis to be applied toward the transportation benefits. Both the company and the employee avoid payroll taxes on the salary reduction.

In another option, employees can be given the choice of taking the benefit in cash. However, if an employee takes cash, the amount is included in the employee's compensation and subject to employment taxes.

So your company can provide up to $335 in monthly tax-free benefits per employee in 2008. This includes $220 parking, plus $115 in passes or rides. If you give more, the excess must be treated as taxable compensation.

Some limitations: Shareholder-employees of C corporations can collect qualified transportation perks but they're not available as a tax-free fringe benefit to partners, 2-percent-or-more shareholder-employees in an S corporation or independent contractors. Talk with your tax adviser about the best way to set up a program.