Employees’ Fringe Benefits after Tax Reform
Many areas of tax law were impacted by the 2017 Tax Act, so why should certain employee benefits be excluded from the fun.
Here is a brief explanation of the changes to employee fringe benefits.
Qualified Transportation Fringe Benefits
Qualified transportation fringe benefits include parking, transit passes, commuter (van pool) transportation, and bicycle commuting.
Qualified parking – The tax-free fringe benefit for qualified parking is still available to employees and is capped at $265 per month for 2019, up from $260 in 2018.
Transit Passes – The tax-free fringe benefit for transit passes is also still available to employees, up to $265 per month for 2019, an increase from $260 in 2018.
Bicycle Commuting – Unfortunately, tax reform did away with the $20-per-month tax-free reimbursement for the cost of an employee commuting to work on a bicycle.
Commuting – Tax reform killed the monthly commuting fringe benefit (which was $260 in 2018) except when necessary for ensuring the safety of an employee. When allowed, the maximum amount is the same as the transit pass fringe benefit.
However, even though they are excludable fringe benefits for employees, after 2017, employers can no longer deduct their expenses for parking or mass transit passes or commuter highway vehicle transportation provided to their employees.
Deduction for moving expenses – Gone! Well, sort of. Any deduction for moving expense is suspended for the years 2018 through 2025, and any employer reimbursement is taxable and included in the employee’s W-2. After 2025, however, taxpayers who move because of a change in work location who meet certain distance and time requirements will able to deduct their moving costs in excess of any tax-free reimbursement from their employer. Unless, of course, Congress changes to law again.
There is is good news for men and women in the armed forces, though. Moving expenses are still deductible for military members on active duty for moves pursuant to military orders.