When Congress declined to extend 55 tax breaks as part of the FY2014 budget deal, it suddenly became a much better deal for employees to drive to work instead of taking public transportation.
For years, the tax code treated employer subsidies for employee parking and mass transit roughly equally. Employers could give employees up to $250 per month tax-free to pay for parking and $245 per month to take the bus or subway.
Expiration of part of the Internal Revenue Code cut the tax-free mass-transit subsidy to just $130 per month. Congress could move to restore parity retroactively, and Senate Majority Leader Harry Reid says he plans to introduce legislation to do so.
But for now, any mass transit benefits in excess of $130 per month count as taxable income for employees.
Tip: Remind your payroll department of this change.
- State exchange premiums compete with employer-provided plans
- Check pay rates for employees who regularly swap work
- What should we do? If employee took all her comp time, she couldn't do her job
- Workplace notices: Are your labor-law posters out of date?
- U.S. Supreme Court will decide the fate of health care reform