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 Â§ 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 vanpool benefits (i.e. "qualified transportation benefits"). However, a federal Act subsequent to January 1, 1998, created differences between the Massachusetts and federal exclusion amounts. Technical Information Releases ("TIRs") 98-15, 99-23 and 00-4 describe these Code changes and how they affect the Massachusetts personal income tax. This TIR updates TIR 00-4 by providing the Massachusetts exclusion amounts for tax year 2001.
Revenue Procedure 2001-13 provides the 2001 cost-of-living inflation adjustment for the qualified transportation fringe benefit monthly exclusion amounts allowed under IRC § 132(f)(2). The federal exclusion amounts for tax year 2001 are $180 per month for employer-provided parking and $65 per month for employer-provided vanpool and transit pass benefits combined. Revenue Procedure 2001-13, § 3.07. In contrast, Massachusetts follows the inflation adjustment formula allowed under the January 1, 1998 Code. As a result, the Massachusetts exclusion amounts for tax year 2001 are $185 per month for employer-provided parking and $70 per month for employer-provided vanpool and transit pass benefits combined, the same exclusion amounts that were allowed for tax year 2000.
/s/Bernard F. Crowley, Jr.
Bernard F. Crowley, Jr.
Acting Commissioner of Revenue
August 28, 2001