Tax Act makes changes to employer-provided transportation benefits
January 10, 2018
Article courtesy of SBAM Approved Partner Kushner & Co.
Under the recently passed Tax Cuts and Jobs Act of 2017, employer-provided transportation benefits are somewhat pared back beginning in 2018.
While employee pre-tax parking and transit benefits remain intact and at their current level of up to $260 per month (with the proper plan documents, of course), employer-paid parking or transit benefits are disallowed as a deduction [Section 13304(c)] for tax years beginning after December 31, 2017. Further, Section 11047 provides that qualified bicycle commuting expenses will no longer be tax exempt to employees effective for tax years beginning after December 31, 2017.
Many employers in urban and some suburban settings that previously provided fully or partially paid parking or transit benefits to employees will want to re-examine their policy given this new non-deductibility. Those employers may wish to switch to employee-paid pre-tax parking or transit benefits. Some may still wish to continue to provide that benefit as a recruitment and/or retention tool, but others might wish to curtail or eliminate it completely.