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274 to limit or eliminate tax deductions for expenses related to QTF benefits. 1, 2018, the law known as the Tax Cuts and Jobs Act (TCJA), P.L. Parking or transit benefits that exceed the monthly limits are taxable as compensation to the employees (e.g., where the fair market value of parking is $300 per month in 2018, only $260 per month is excluded from employee compensation).Įmployers had been generally allowed to deduct their costs for providing employees QTF benefits. Transit pass and van pool benefits are limited to an inflation- adjusted maximum amount ($260 per month for 2018 and $265 per month for 2019), and qualified parking is subject to a separate limit of the same amount.
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Those benefits are also exempt from Federal Insurance Contributions Act, Medicare, and Federal Unemployment Tax Act taxes. QTF benefits can be provided directly to employees as tax- free benefits (free parking, free transit passes, reimbursements for parking, etc.), or the employee can pay for the benefits tax- free using a salary reduction arrangement. These benefits include mass transit benefits, van pools, qualified parking, and some other commuter benefits.
#IRC 132 CODE#
The Internal Revenue Code allows employers to offer nontaxable qualified transportation fringe (QTF) benefits under Sec.