Technical Information Release  TIR 20-16: Massachusetts Exclusion Amounts for Employer-Provided Parking, Transit Pass and Commuter Highway Vehicle Benefits for Taxable Years Beginning in 2021

Date:	12/16/2020
Referenced Sources:	Massachusetts General Laws

I. Introduction

This Technical Information Release (“TIR”) explains the 2021 Massachusetts personal income tax exclusion amounts for employer-provided parking, transit pass and commuter highway vehicle benefits allowed to employees.

For taxable years beginning in 2021, the federal monthly exclusion amounts are $270 for employer-provided parking and $270 for transit pass and commuter highway vehicle benefits combined.[1] The Massachusetts monthly exclusion amounts are $275 for employer-provided parking and $145 for combined transit pass and commuter highway vehicle transportation benefits, as further explained below.[2]

II. Discussion

In general, for purposes of determining Massachusetts gross income, the Massachusetts personal income tax laws follow the provisions of the Internal Revenue Code (“IRC”) as amended and in effect on January 1, 2005.  Accordingly, Massachusetts follows IRC § 132(f) as amended and in effect on January 1, 2005, which excludes from an employee’s gross income employer-provided parking, transit pass and commuter highway vehicle transportation benefits, subject to a monthly maximum. IRC § 132(f)(6) provides for an inflation adjustment to those monthly maximums in the case of any taxable year beginning in a calendar year after 1999. Taking into account these inflation adjustments, the Massachusetts monthly exclusion amounts for taxable years beginning in 2021 are $275 for employer-provided parking and $145 for combined transit pass and commuter highway vehicle transportation benefits. The Massachusetts exclusion amount for combined transit pass and commuter highway vehicle transportation benefits does not include the increase in the federal exclusion amount for such benefits that was signed into law on December 18, 2015.[3] Massachusetts does not follow this amendment, and will not follow any future amendments to IRC §132(f), unless the Massachusetts Legislature acts to adopt such changes. 

 

                                                                                    /s/Geoffrey E. Snyder
                                                                                    Geoffrey E. Snyder
                                                                                    Commissioner of Revenue
 

GES:RHF:wem

December 16, 2020

TIR 20-16

[1] See IRS Revenue Procedure 2020-45.

[2] Transit pass and commuter highway vehicle transportation benefits are combined for purposes of sharing the $145 maximum monthly exclusion.  For example, if an employee receives a $100 monthly transit pass and a $100 monthly commuter highway vehicle transportation benefit, the $55 excess would be includable in the employee’s wages for income and employment tax purposes. 

[3] See H.R. 2029 – 114th Congress (2015-2016): Consolidated Appropriations Act of 2016, Division Q, § 105.