Supporting Transit Commutes

Summary#

This bill amends the Internal Revenue Code to let employers deduct some transportation fringe benefits that are normally disallowed under section 274(l). It adds an exception for qualified transportation fringes described in section 132(f)(1)(A) or (B) up to the limit in section 132(f)(2)(A). If an employee can choose between receiving the fringe benefit and receiving cash (a salary reduction agreement), the employer's deduction for that benefit is limited to 50 percent of the allowed amount. The bill also makes a conforming change to the subsection heading for qualified bicycle commuting reimbursement. The changes apply to amounts paid or incurred after the bill is enacted, in taxable years ending after that date.

What it means for you#

• Employers: May be able to take a tax deduction for certain qualified transportation fringe benefits up to the statutory limit in section 132(f)(2)(A). If the benefit is provided under a salary reduction agreement where an employee can opt for cash instead, the employer's deduction is limited to half of the amount.
• Employees: The bill text addresses employer tax deductions. It does not include other changes to employee tax rules in the provided text.
• Tax professionals and payroll departments: Will need to apply the new deduction rules, including the 50 percent limit when salary reduction choices exist, starting for taxable years ending after the enactment date.

Expenses#

No publicly available information on federal budgetary costs or savings is provided in the bill text.

Proponents' View#

No publicly available information on proponents' stated reasons or arguments is included in the bill text or provided metadata.

Opponents' View#

No publicly available information on opponents' stated reasons or arguments is included in the bill text or provided metadata.