As we mentioned in our prior article regarding the passing of the Tax Cuts and Jobs Act (“Act”), health and welfare plans were affected by the new law.
No longer can employers take a deduction on their tax return for contributions to an employer-sponsored qualified transportation fringe benefit provided on a tax-free basis to an employee. This includes expenses for transit passes, qualified parking and bicycle commuting expenses, in addition to transportation in a commuter highway vehicle. However, the employer can still deduct the expense of providing travel between an employee’s residence and place of employment if it is to ensure safety of the employee.
Note that while employers may not be able to take a deduction, employees may still exclude reimbursements (except for qualified bicycle commuting reimbursements through the year 2026) from their gross income.
Nyhart’s Consumer Driven Healthcare administration team is able to assist you in understanding how the Act may affect your employee benefit plan. Please contact your Nyhart consultant for more information.