Supporting Transit Commutes Act
The Supporting Transit Commutes Act would change how employer-provided transportation fringe benefits are treated for tax deduction purposes. Specifically, it creates an exception to current rules that limit or disallow deductions for certain transportation benefits. Under the bill, the portion of qualified transportation fringe benefits (such as transit passes and parking benefits) that falls within the current Section 132(f) limit could be deductible to employers. However, if the fringe benefit is provided under a salary-reduction arrangement that allows employees to receive cash instead of the fringe benefit, then only 50% of that deductible amount would be allowed. The bill also makes a conforming change to reference bicycle commuting reimbursements and applies the changes to amounts paid or incurred after the enactment date for tax years ending after that date. In short, the bill would make it easier for employers to deduct certain transit-related fringe benefits (up to the existing 132(f) limit), with a reduced deduction if employees can cash out the benefit, and it clarifies bicycle commuting reimbursements in the related provisions.
Key Points
- 1Creates an exception to current deductions under Section 274(l) to allow employers to deduct up to the Section 132(f) limit for qualified transportation fringe benefits described in 132(f)(1)(A) or (B) (e.g., transit benefits and parking).
- 2If the fringe benefit is provided under a salary-reduction arrangement with a cash option for the employee, the deduction is reduced to 50% of the amount described above.
- 3Applies the new deduction rules to amounts paid or incurred after enactment for taxable years ending after enactment.
- 4Conforms the statutory heading to include “for qualified bicycle commuting reimbursement” and adjusts the internal references accordingly.
- 5The bill does not create new fringe benefits; it changes how existing transportation fringes are deductible for employers within the current limit structure.