This Technical Information Release (“TIR”) explains the Massachusetts personal income tax tie-in to the federal personal income tax exclusion for employer-provided parking, transit pass and commuter highway vehicles benefits allowed to employees. The TIR describes the 2012 Massachusetts adoption of this federal exclusion based on the January 1, 2005 Code provisions that provide and calculate the annual exclusion benefit.
In general, the Massachusetts personal income tax follows the provisions of the Internal Revenue Code (“the Code” or “IRC”), as amended on January 1, 2005 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, 2005, which excludes from an employee’s gross income (subject to a monthly maximum) employer-provided parking, transit pass and commuter highway vehicle transportation benefits. However, two federal Acts enacted subsequent to January 1, 2005 created a temporary difference between the Massachusetts and federal exclusion amount for the transit pass and commuter highway vehicle transportation benefits for tax years 2009, 2010 and 2011. For tax year 2012, the two federal Acts have expired, resulting in Massachusetts once again adopting the federal exclusion amount for both the employer-provided parking and transit pass and commuter highway vehicle benefits.
III. Massachusetts Adoption of Federal 2012 Tax Year Inflation Adjustments for Employer-Provided Parking, Transit Pass and Commuter Highway Vehicle Benefits
Annually, the IRS issues a revenue procedure announcing the calculated inflation adjustments, if any, as to dollar amounts set forth in certain Code provisions, including the exclusion amounts for the employer-provided parking, transit pass and commuter highway vehicle benefits referenced in IRC § 132(f). For the 2012 tax year, the IRS has calculated, based on the January 1, 2005 Code, the 2012 exclusion amounts for employer-provided parking and combined transit pass and commuter highway vehicle transportation benefits as $240 and $125 per month respectively. Massachusetts adopts the inflation adjustments based on the January 1, 2005 Code, and therefore adopts the 2012 tax year monthly exclusion amounts of $240 per month for employer-provided parking and $125 per month for combined transit pass and commuter highway vehicle transportation benefits.
Commissioner of Revenue
January 5, 2012