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 vehicle benefits allowed to employees. The TIR describes the impact for 2013 of the Massachusetts adoption of this federal exclusion based on the January 1, 2005 Code provisions that provide the annual exclusion benefit. For tax year 2013 the Massachusetts monthly exclusion amounts are $245 for employer-provided parking and $125 for combined transit pass and commuter highway vehicle transportation benefits, as further explained below.
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.
In January, 2013, a federal Act amended IRC §132(f), increasing the federal monthly exclusion amount for the transit pass and commuter highway vehicle transportation benefits to equal the exclusion amount for the employer-provided parking benefit for both the 2012 and 2013 tax years. Massachusetts does not adopt the 2012 and 2013 exclusion amount increases to the transit pass and commuter highway vehicle transportation benefits, given that they were enacted subsequent to January 1, 2005.
III. Massachusetts 2013 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 employer-provided parking and the combined transit pass and commuter highway vehicle benefits referenced in IRC § 132(f). For tax year 2013, the IRS has calculated, based on the January 1, 2005 Code, a monthly exclusion amount of $245 for employer-provided parking. Massachusetts adopts this number given that this calculation is based upon the January 1, 2005 Code. For tax year 2013, the IRS has not calculated a monthly exclusion amount for the combined transit pass and commuter highway vehicle benefit. Therefore, for Massachusetts personal income tax purposes, the inflation adjustment was independently calculated under the formula provided in the January 1, 2005 Code, resulting in the 2013 monthly exclusion amount of $125 for combined transit pass and commuter highway vehicle transportation benefits.
Commissioner of Revenue
January 31, 2013
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