Transportation Compliance Update

New Law Impacts Pre-Tax Transportation Management
and Parking Plans beginning for 2018

The Tax Cuts and Job Acts Bill contains a new law that will impact transportation management and parking plans beginning in 2018. There is plenty of incentive for employers to continue to offer these pre-tax benefits to your employees. Below is the outline of changes:

  • Employers may continue offering tax-free qualified transportation plans (qualified parking, transit, or van) to their employees. However, for tax years beginning after December 31, 2017 employers can no longer take a business deduction for the expenses related to the provision of these plans to their employees. Expenses such as administration fees will no longer be tax deductible.
  • Employers offering these benefits on a pre-tax basis will continue to benefit from the payroll tax exclusion (e.g. saving on the FICA match).
  • The new law also lowers the corporate tax rate from 35% to 21%. Therefore, the loss of the employer deduction for tax-free transportation plans is offset by the lower corporate tax rate.
  • During the 2018 to 2025 tax years, employees will no longer enjoy income tax exclusion for qualified bicycle commuting reimbursements. Such reimbursements will be tax deductible to the employer during this time.

For additional information regarding the changes to these benefit plans please review the Tax Cuts & Jobs Act Bill, contact your BeneFLEX Account Manager, or