In general, the Massachusetts personal income tax relies on the provisions of the Internal Revenue Code ("the Code" or "IRC") as amended on January 1, 1998, and in effect for the taxable year, in determining Massachusetts gross income. In particular, Massachusetts follows IRC § 132(f) as amended and in effect on January 1, 1998, which excludes from an employee's gross income (subject to a monthly maximum) employer-provided parking, transit passes and employer-provided vanpool benefits (i.e. "qualified transportation benefits"). However, a federal Act subsequent to January 1, 1998, has created differences between the Massachusetts and federal exclusion amounts. Technical Information Releases ("TIRs") 98-15 and 99-23 describe these Code changes and how they affect the Massachusetts personal income tax. This TIR updates TIR 99-23 by providing the Massachusetts exclusion amounts for tax year 2000.
Public Law 105-178, enacted on June 6, 1998, changed the federal provision that calculates the inflation adjustment for the qualified transportation fringe benefit monthly exclusion amounts. IRC § 132(f)(2). In contrast, Massachusetts follows the inflation adjustment formula allowed under the January 1, 1998 Code. As a result, for tax year 2000, Massachusetts allows an exclusion of $185 per month for employer-provided parking and $70 per month for vanpool and transit pass benefits combined. The federal exclusion amounts for tax year 2000 of $175 and $65, respectively, remained unchanged. Revenue Procedure 99-42.
Frederick A. Laskey,
Commissioner of Revenue
March 3, 2000