What does the new tax bill mean for the commuter benefits? Whether you’re offering them for your employees or receiving them at work, we wanted to make sure everyone’s on the same page.
Some background info: Qualified Transportation Fringe Benefits are what we’re talking about here, which includes employer-provided parking, transit passes, bicycle reimbursement, and vanpool funding.
The good news for employees in 2018 — you can still exclude most of these benefits from your income, so you still won’t be taxed on it. You can also still include a portion of your income directly to a transit or parking pass, up to $260/month.
The bad news? Employers may no longer deduct the value of the provided benefit from their taxes, whether it’s provided directly to the employees or as part of a voluntary pre-tax program.
According to initial analyses, the change in corporate tax rate for employers should be more than enough to offset the loss of deduction for transportation benefits.
Whether that’s true or not, we strongly urge employers not to remove any of these transit benefits. Not only are they essential for encouraging more people to take alternative transportation options to get to work every day and improving our planet, but they make your employees happy.
According to a report by the Environmental Protection Agency, 86 percent of American workers consider commuter benefits to be “beneficial and useful” — and because their commutes are easier, they find the company itself to be a better place to work.
Commuter benefits are essential to attracting and retaining the right talent, regardless of whether you can deduct them from your yearly taxes. Providing these benefits have been found to have a positive effect on job satisfaction, helping you to achieve a higher employee retention rate overall.