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Do You Know the Tax Changes in Commuting Costs?

Apr 02, 2018

Do You Know the Tax Changes in Commuting Costs?

Beginning in 2018, employers will no longer be able to deduct contributions for employee transportation expenses, parking expenses or biking expenses, except as necessary for ensuring the safety of an employee. However, the corporate tax rate decrease from 35 percent to 21 percent may offset the loss of many employer deductions. Employees can still pay their own mass transit or workplace parking costs using pretax income, through an employer-sponsored salary-deduction program.

  1. Transportation Expenses: Employer tax deduction eliminated. Employee pre-tax contribution limit increases from $255 per month to $260 per month.
  2. Parking Expenses: Employer tax deduction eliminated. Employee pre-tax contribution limit increases from $255 per month to $260 per month.
  3. Biking Expenses: Employer tax deduction eliminated. Employee pre-tax contribution limit remains $20 per month.
  4. Employer reimbursement of biking expenses will be considered taxable income for employees starting in 2018.
  5.  Employers can continue to cover the cost of parking and mass transit for their employees without creating a taxable event for employees.