The Tax Cuts and Jobs Act, which passed both houses of Congress Wednesday, includes changes to commuter benefits for employers and employees. An official with the Society of Human Resources Management explains.
Editor’s Note: This story has been edited to correct that private individuals do not have to claim transit commuter benefits on their 2017 tax returns. In a previous version of this story, Kathleen Coulombe said individuals had to report any pretax benefits.
WASHINGTON — The new tax reform bill means changes to commuter benefits for employers which could affect employees benefits.
The new Tax Cuts and Jobs Act means employers offering a pretax salary deduction program for commuting benefits can no longer deduct the program as a business expense. However they will continued to be taxed said Kathleen Coulombe with the Society of Human Resources Management.
Therefore, there’s a chance employers will decrease the benefit in the new year, or do away with it completely. However, Coulombe does not anticipate much of a change.
“If you’re in a major metro area and you’re an employer providing this type of benefit to your employees, chances are [you] won’t drop that benefit,” she said.
The IRS announced in October that for 2018, the tax-excludable limit for transportation and parking expenses will be $260 per month, while the exclusion for biking expenses stays at $20, wrote Stephen Miller on the SHRM website.
Unlike other commuting options, the biking benefit will work differently in the new year. The bill essentially “suspends the exclusion from gross income and wages for qualified bicycle commuting reimbursements for taxable years beginning after Dec. 31, 2017 and before Jan. 1, 2026,” Miller writes.
Pretax benefits earned for biking through an employer-subsidized program will be taxable income that private taxpayers will need to file in their taxes, Coulombe said.
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