I. Introduction

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 2015 of the Massachusetts adoption of this federal exclusion based on the January 1, 2005 Code provisions. For tax year 2015 the Massachusetts monthly exclusion amounts are $250 for employer-provided parking and $130 for combined transit pass and commuter highway vehicle transportation benefits, as further explained below.[1]

II. Discussion

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.[2]

In previous tax years federal Acts have 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.[3]  Massachusetts does not adopt the 2014 tax year exclusion amount increase to the transit pass and commuter highway vehicle transportation benefits, given that it was enacted subsequent to January 1, 2005.[4]

III. Massachusetts 2015 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 2015, the IRS has calculated, based on the January 1, 2005 Code, a monthly exclusion amount of $250 for employer-provided parking and $130 for combined transit pass and commuter highway vehicle transportation benefits. Massachusetts adopts these monthly exclusion amounts given that these calculations are based upon the January 1, 2005 Code.[5]  

 

/s/ Amy Pitter 
Amy Pitter
Commissioner of Revenue

 

AP:MTF:jmw

TIR 14-15

December 23, 2014

 


[1] Transit pass and commuter highway vehicle transportation benefits are combined for purposes of sharing the $130 maximum monthly exclusion.  For example, if an employee receives a $100 monthly transit pass and a $100 monthly commuter highway vehicle transportation benefit, the $70 excess would be includible in the employee’s wages for income and employment tax purposes.
[2] Massachusetts does not adopt the federal qualified bicycle commuting reimbursement.  See IRC 132(f)(1)(D), effective for tax years beginning after December 31, 2008 and added by the federal Energy Improvement and Extension Act of 2008 (P.L. 110-343).
[3] See TIRs 12-1 and 13-2.   
[4] The federal monthly exclusion amount for tax year 2014 for combined transit pass and commuter highway vehicle transportation benefits was increased to $250 by the Tax Increase Prevention Act of 2014 (H.R. 5771).  It is possible that Congress may act to amend IRC §132(f) to change the federal  2015 exclusion amounts for employer-provided parking and combined transit pass and commuter highway vehicle transportation benefits after the publication of this TIR.  In such event, unless the Massachusetts Legislature acts to adopt such changes, Massachusetts will not adopt those changes to IRC §132(f).
[5] Revenue Procedure 2014-61.