Individual incentives for public transportation

Evidence Rating  
Evidence rating: Some Evidence

Strategies with this rating are likely to work, but further research is needed to confirm effects. These strategies have been tested more than once and results trend positive overall.

Disparity Rating  
Disparity rating: Inconclusive impact on disparities

Strategies with this rating do not have enough evidence to assess potential impact on disparities.

Health Factors  
Decision Makers
Date last updated

Incentives such as free or discounted bus, rail, or transit passes, reimbursements, partial payments1, or pre-tax payroll deductions2 decrease consumers’ cost to use public transportation. Incentives are typically offered by employers as a commuter benefit and can be part of transportation subsidy programs, deep discounting, or transit pass incentive programs1.

What could this strategy improve?

Expected Benefits

Our evidence rating is based on the likelihood of achieving these outcomes:

  • Increased use of public transit

  • Increased physical activity

Potential Benefits

Our evidence rating is not based on these outcomes, but these benefits may also be possible:

  • Increased active transportation

  • Reduced obesity rates

  • Increased mobility

  • Reduced vehicle miles traveled

  • Reduced emissions

What does the research say about effectiveness?

There is some evidence that offering individual incentives for public transit increases public transit use1, 3, 4, 5, 6, 7, 8, 9. Such incentives can also increase physical activity for individuals who use non-motorized travel to and from transit stops10, 11, 12, 13, 14, 15. However, additional evidence is needed to confirm effects.

Combining incentives such as discounted passes with improved transit service and higher private vehicle fees (e.g., increased parking costs) can increase public transit use and reduce automobile use4, 16. Individual incentive programs that combine discounted transit passes with parking reimbursement17 and efforts to market incentives to employees can also increase transit use4. Transit pass incentive programs, such as offering free-fare cards, have been particularly successful at increasing public transit use among individuals with low incomes3 and may also increase use by college students6, 18. An Atlanta-based study suggests that employees provided with free or subsidized transit passes may be more likely to commute via public transit; however, if free or subsidized parking is also offered, then employees are less likely to use public transit7. High gas prices19, 20, 21, not having children, and having a flexible schedule or one that matches transit availability also increase the likelihood of using a transit pass21.

Model-based research suggests that reducing fares may generate small increases in transit use, while increasing fares may significantly reduce use22. Overall, price sensitivity to fares depends on whether a traveler is transit dependent4, 23, the type of trip, time of day, and geographic conditions, such as population density and the character of the built environment4. Distance-based fare reductions may increase ridership among households with low incomes, older adults, and minority individuals, who often use public transit to travel shorter distances than wealthier, younger, or white riders24. A Canada-based study suggests that a community-wide free bus program may increase older adults’ use of public transit, in part due to the cost savings and additional opportunities for social interaction25.

Transit users have higher levels of physical activity than non-transit users10, 26, 27. Incentives for public transit use have been shown to increase active travel options such as walking and cycling12, 28, which may reduce the likelihood of becoming obese11, 13. Experts suggest public-private partnerships between, for example, public transit agencies and ride-hailing platforms, may help address the last mile problem (i.e., transit stations are not within walking distance to businesses, workplaces, or homes) by bringing transit users to their final destinations, and may increase public transit use29. Additionally, a Portland-based study that gave prepaid transportation services debit cards to transit users with low incomes suggests participants may increase public transit use and may expand their use of other types of transportation, such as bike shares and ride-hailing services30.

Individual incentives are a suggested strategy to reduce single occupancy vehicle trips, vehicle miles traveled (VMT), and emissions5, 31, 32, 33, 34, and may be a cost effective strategy to reduce greenhouse gas emissions35, 36. Public transportation systems produce significantly fewer emissions per passenger mile than private vehicles, especially when operating with full passenger loads35, 37.

Incentive programs may increase transportation revenue32, reduce transportation costs for employers and individuals18, 32, and cost less than providing parking spaces for commuters17, 38. A study of California transit agencies indicates transit pass programs for students or employees that are funded by the partnering school or employer may experience improved financial sustainability39.

How could this strategy advance health equity? This strategy is rated inconclusive impact on disparities.

It is unclear what impact individual incentives for public transportation have on disparities in access to and use of public transportation. Individuals with low incomes may spend a larger portion of their budget on transportation and may rely disproportionately on public transit compared to others with higher incomes3. People with low incomes may be more likely to combine walking with public transit, and to use less transportation than they need or want, further limiting access30.

A Seattle-based study of a public transit program that provided free-fare passes to individuals with low incomes showed participants quadrupled their average public transit use3. An Atlanta-based study of employer-subsidized public transit passes suggests disparities in pass access may exist for individuals with low incomes, with the added complication of systematic barriers to quality transit options, which limits the use of available transit passes47.

Experts suggest that if public transit agencies prioritize profits over access when designing incentive programs, people with low incomes may be more likely to lose access to public transit48.

What is the relevant historical background?

Public transportation systems in the U.S. have been shaped by many factors, including car ownership, residential living patterns, federal funding, and the mass construction of interstate highways. Ultimately, the growth and sprawl of cities in the U.S. was largely driven by discriminatory housing policies and car-centric urban planning, which often prevents provision of equitable, consistent, and reliable public transit service49. The result has been uneven accessibility to viable and efficient transportation modes across regions and social groups, and overall reduced use of public transit47.

In the 1980s, transportation experts recommended employer-subsidized transit incentives to encourage public transit use as a way of reducing the environmental impact of private vehicles, easing traffic congestion, and making travel more affordable. Beginning in 1984, federal tax law began to permit tax benefits for employer-paid transit benefits; over time, the ensuing acts increased the benefit amounts and expanded benefits to employees47.

Other programs have sought to increase access to public transit through income-based programs for reduced fare or free-fare transit passes. In the past decade, Dallas, New York City, Portland, San Francisco, and Seattle have implemented large-scale, income-based reduced fare programs. Furthermore, several cities, including Boston and Salt Lake City, are working to eliminate transit fares for people with low incomes3.

Equity Considerations
  • Who has limited access to transit in your community? How can planners engage local community members to learn about the challenges they experience and what incentives could increase access?
  • How would a public transit incentive system impact access for current residents of your community? Which strategies and partnerships could help maximize the use of incentives?
  • What opportunities are there to connect incentives for public transit with affordable housing efforts, Low Income Housing Tax Credits (LIHTC), inclusionary zoning, or other housing programs? Who can you partner with to increase these opportunities?
  • Which local employers have employee incentive programs for public transit? Who could you partner with to support such programs or create new ones?
Implementation Examples

The federal government has a transportation subsidy program in place for any federal employee in the National Capital Region that uses public transportation to commute to work40. Some states (e.g., Oregon) award energy tax credits to businesses or organizations that offer financial incentives to encourage employees to use public transportation or alternatives to single occupancy vehicles for their commutes41. Municipalities can adopt transportation management plans that include incentives to encourage public transportation use, walking, or bicycling, and reduce single occupancy vehicle use, as in the City of Alexandria, Virginia42. Additionally, incentives can be used to shift the time of travel to ease congestion, such as the Commuter Connections Flextime Rewards program in the Washington, D.C. area43.

Other individual incentives, such as transit pass incentive programs for employers, students, and state or city employees are available in many municipalities, including Austin, Texas; Seattle and Olympia, Washington; Monroe County, Pennsylvania; Nashville, Tennessee; Portland, Oregon44; and Yolo County, California45. The Portland Bureau of Transportation’s (PBOT’s) Transportation Wallet (TW) program, a collection of passes and credits that can be used for transit, streetcars, bike shares, and scooters, was established to reduce parking demand and congestion by increasing the use of alternative modes of transportation, including public transit and active transportation. PBOT expanded the TW program in 2019 to include an affordable housing pilot program that would bring a similar bundle of transportation credits to residents of affordable housing units in Portland46.

Implementation Resources

Resources with a focus on equity.

HPbD - Healthy Places by Design (HPbD). Advances community-led action and proven, place-based strategies to ensure health and wellbeing for all.

SF Environment 2018 - San Francisco Environment Department. How to Implement a Commuter Benefits Program. City and County of San Francisco.

WisDOT-Public Transit - Wisconsin Department of Transportation (WisDOT). Travel by public transit.

VTPI-Litman 2017 - Litman T. Evaluating public transit benefits and costs: Best practices guidebook. Victoria, BC: Victoria Transport Policy Institute (VTPI); 2017.

SC DHEC-Air quality - South Carolina Department of Health and Environmental Control (SC DHEC). Your air.

NCTR-Commuter benefits - National Center for Transit Research (NCTR). Commuter tax benefits. Center for Urban Transportation Research (CUTR), University of South Florida (USF).

Project Drawdown-PT - Project Drawdown. Climate solutions: Public transit.


* Journal subscription may be required for access.

1 Bueno 2017 - Bueno PC, Gomez J, Peters JR, Vassallo JM. Understanding the effects of transit benefits on employees’ travel behavior: Evidence from the New York-New Jersey region. Transportation Research Part A: Policy and Practice. 2017;99:1-13.

2 NCTR-Commuter benefits - National Center for Transit Research (NCTR). Commuter tax benefits. Center for Urban Transportation Research (CUTR), University of South Florida (USF).

3 Brough 2022 - Brough R, Freedman M, Phillips DC. Experimental evidence on the effects of means-tested public transportation subsidies on travel behavior. Regional Science and Urban Economics. 2022;96:103803.

4 VTPI-Litman 2017a - Litman T. Transit price elasticities and cross-elasticities. Victoria, BC: Victoria Transport Policy Institute (VTPI); 2017.

5 Graham-Rowe 2011 - Graham-Rowe E, Skippon S, Gardner B, Abraham C. Can we reduce car use and, if so, how? A review of available evidence. Transportation Research Part A: Policy and Practice. 2011;45(5):401-418.

6 Zhou 2014a - Zhou J. From better understandings to proactive actions: Housing location and commuting mode choices among university students. Transport Policy. 2014;33:166-175.

7 Ghimire 2019 - Ghimire R, Lancelin C. The relationship between financial incentives provided by employers and commuters’ decision to use transit: Results from the Atlanta Regional Household Travel Survey. Transport Policy. 2019;74:103-113.

8 Dong 2016a - Dong H, Ma L, Broach J. Promoting sustainable travel modes for commute tours: A comparison of the effects of home and work locations and employer-provided incentives. International Journal of Sustainable Transportation. 2016;10(6):485-494.

9 Yang 2015b - Yang L, Hipp JA, Adlakha D, et al. Choice of commuting mode among employees: Do home neighborhood environment, worksite neighborhood environment, and worksite policy and supports matter? Journal of Transport & Health. 2015;2(2):212-218.

10 Saelens 2014 - Saelens BE, Vernez Moudon A, Kang B, Hurvitz PM, Zhou C. Relation between higher physical activity and public transit use. American Journal of Public Health. 2014;104(5):854-859.

11 MacDonald 2010 - MacDonald JM, Stokes RJ, Cohen DA, Kofner A, Ridgeway GK. The effect of light rail transit on body mass index and physical activity. American Journal of Preventive Medicine. 2010;39(2):105-12.

12 Martin 2012 - Martin A, Suhrcke M, Ogilvie D. Financial incentives to promote active travel: an evidence review and economic framework. American Journal of Preventive Medicine. 2012;43(6):e45-57.

13 Webb 2012 - Webb E, Netuveli G, Millett C. Free bus passes, use of public transport and obesity among older people in England. Journal of Epidemiology and Community Health. 2012;66(2):176-180.

14 Hipp 2017 - Hipp JA, Dodson EA, Lee JA, et al. Mixed methods analysis of eighteen worksite policies, programs, and environments for physical activity. International Journal of Behavioral Nutrition and Physical Activity. 2017;14(1):79.

15 Freeland 2013 - Freeland AL, Banerjee SN, Dannenberg AL, Wendel AM. Walking associated with public transit: Moving toward increased physical activity in the United States. American Journal of Public Health. 2013;103(3):536-542.

16 Petrunoff 2015 - Petrunoff N, Rissel C, Wen LM, Martin J. Carrots and sticks vs carrots: Comparing approaches to workplace travel plans using disincentives for driving and incentives for active travel. Journal of Transport & Health. 2015;2(4):563-567.

17 Lari 2014 - Lari A, Douma F, Yang KL, Caskey K, Cureton C. Innovative parking pricing demonstration in the Twin Cities: Introducing flexibility and incentives to parking contracts. Minneapolis, MN: Center for Transportation Studies, University of Minnesota; 2014.

18 Myers 2006 - Myers G, Hagen DA, Russo T, et al. Benefits of campus transit pass: Study of student’s willingness to pay for proposed mandatory transit pass program. Transportation Research Record: Journal of the Transportation Research Board. 2006;1971:133-139.

19 Iseki 2015 - Iseki H, Ali R. Fixed-effects panel data analysis of gasoline prices, fare, service supply, and service frequency on transit ridership in 10 U.S. urbanized areas. Transportation Research Record: Journal of the Transportation Research Board. 2015;2537:71-80.

20 Iseki 2014 - Iseki H, Ali R. Net effects of gasoline price changes on transit ridership in U.S. urban areas. San Jose, CA: Mineta Transportation Institute (MTI); 2014.

21 Zhou 2011 - Zhou J, Schweitzer L. Getting drivers to switch: Transit price and service quality among commuters. Journal of Urban Planning and Development. 2011;137(4):477-483.

22 Chen 2011 - Chen C, Varley D, & Chen J. What affects transit ridership? A dynamic analysis involving multiple factors, lags and asymmetric behaviour. Urban Studies. 2011;48(9):1893-1908.

23 Miller 2017 - Miller C, Savage I. Does the demand response to transit fare increases vary by income? Transport Policy. 2017;55:79-86.

24 Farber 2014 - Farber S, Bartholomew K, Li X, Páez A, Nurul Habib KM. Assessing social equity in distance based transit fares using a model of travel behavior. Transportation Research Part A: Policy and Practice. 2014;67:291-303.

25 Mah 2017 - Mah S, Mitra R. The effects of a free bus program on older adults travel behaviour: A case study of a Canadian suburban municipality. Case Studies on Transport Policy. 2017;5(3):460-466.

26 Lachapelle 2009 - Lachapelle U, Frank LD. Transit and health: mode of transport, employer-sponsored public transit pass programs, and physical activity. Journal of Public Health Policy. 2009;30(Suppl 1):S73-94.

27 Wener 2007 - Wener RE, Evans GW. A morning stroll: Levels of physical activity in car and mass transit commuting. Environment and Behavior. 2007;39(1):62-74.

28 Coronini-Cronberg 2012 - Coronini-Cronberg S, Millett C, Laverty AA, Webb E. The impact of a free older persons’ bus pass on active travel and regular walking in England. American Journal of Public Health. 2012;102(11):2141-2148.

29 Siddiq 2022 - Siddiq A, Tang CS, Zhang J. Partnerships in urban mobility: Incentive mechanisms for improving public transit adoption. Manufacturing and Service Operations Management. 2022;24(2):956-971.

30 Tan 2021 - Tan H, McNeil N, Macarthur J, Rodgers K. Evaluation of a transportation incentive program for affordable housing residents. Transportation Research Record. 2021;2675(8):240-253.

31 CDC-Transportation recommendation - Centers for Disease Control and Prevention (CDC). Transportation recommendations.

32 RAND-Sorenson 2008 - Sorenson P, Wachs M, Min EY, et al. Moving Los Angeles: Short-term policy options for improving transportation. Santa Monica: RAND Corporation; 2008: Monograph Report 748.

33 Herzog 2007 - Herzog E, Bricka S, Audette L, Rockwell J. Do employee commuter benefits reduce vehicle emissions and fuel consumption? Results of Fall 2004 survey of best workplaces for commuters. Transportation Research Record: Journal of the Transportation Research Board. 2006;1956:34-41.

34 Su 2012 - Su Q, Zhou L. Parking management, financial subsidies to alternatives to drive alone and commute mode choices in Seattle. Regional Science and Urban Economics. 2012;42(1-2):88-97.

35 Project Drawdown-PT - Project Drawdown. Climate solutions: Public transit.

36 Gallivan 2011 - Gallivan F, Ang-Olson J, Liban CB, Kusumoto A. Cost-effective approaches to reduce greenhouse gas emissions through public transportation in Los Angeles, California. Transportation Research Record: Journal of the Transportation Research Board. 2011;2(2217):19-29.

37 US DOT-FTA Transit and climate - U.S. Department of Transportation (U.S. DOT), Federal Transit Administration (FTA). Public transportation's role in responding to climate change. 2010.

38 Shoup 2004 - Shoup DC. Eco passes: An evaluation of employer-based transit programs. Los Angeles: University of California Transportation Center (UCTC); 2004.

39 Saphores 2020 - Saphores J-D, Shah D, Khatun F. A review of reduced and free transit fare programs in California. Irvine: University of California Institute of Transportation Studies; 2020.

40 US DOT-TRANServe - U.S. Department of Transportation (U.S. DOT). TRANServe

41 ODOE-Transportation - Oregon Department of Energy (ODOE). Transportation.

42 Alexandria-TMPs - City of Alexandria, VA. Transportation & Environmental Services (T&ES): Transportation management plans (TMPs) - Special use permit.

43 Commuter Connections-Flextime - Commuter Connections. Commuting solutions for Washington area employers: Flextime.

44 TRB-Boyle 2010 - Boyle DK. TCRP Synthesis 82 - Transit fare arrangements for public employees: A synthesis of transit practice. Washington, D.C.: Transportation Research Board (TRB); 2010.

45 Yolo-TRIP - Yolo Commute. The Rideshare Incentive Program (TRIP). Yolo County, CA.

46 PBOT-Access for All - Portland Bureau of Transportation. Transportation Wallet: Access for All.

47 Lachapelle 2018 - Lachapelle U. Employer subsidized public transit pass: Assessing disparities in access, use, and latent demand. Case Studies on Transport Policy. 2018;6(3):353-363.

48 Sun 2019 - Sun Y, Zhang L. Microeconomic model for designing public transit incentive programs. Transportation Research Record. 2018;2672(4):77-89.

49 NASEM-Thomas 2022 - Thomas DN, Heer N, Wyatt Mitchell I, et al. Racial equity, Black America, and public transportation, volume 1: A review of economic, health, and social impacts. Washington, D.C.: National Academies Press; 2022.