MA DOR Technical Information Release 14-2

Massachusetts Tax Year 2014 Exclusion Amounts for Employer-Provided Parking, Transit Pass and Commuter Highway Vehicle Benefits

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 2014 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 2014 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.

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.

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. Massachusetts did not adopt the 2012 and 2013 tax year exclusion amount increases to the transit pass and commuter highway vehicle transportation benefits, given that they were enacted subsequent to January 1, 2005.

The provision in the federal Act that extended the increased federal monthly exclusion amount for the transit pass and commuter highway vehicle transportation benefits is due to expire on December 31, 2013. Therefore, for tax year 2014 the federal monthly exclusion amounts for transportation benefits are calculated based on IRC § 132(f) as it appeared in the January 1, 2005 Code.

III. Massachusetts 2014 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 2014, 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.