The Tax Cuts and Jobs Act signed into law last December, more commonly referred to as tax reform, made several changes to the transportation fringe benefit (IRC Sec. 132(f)). The legislation maintained the parking and transit tax benefits for individuals. However, it also made the transportation fringe benefit more expensive for non-profits and universities that offer it. Under the new law, non-profits who offer transportation benefits (both parking & transit), are required to pay a 21% Unrelated Business Income Tax on the amounts deducted by employees on a pre-tax basis or provided by employers as a subsidy. The only way a tax-exempt organization can avoid this tax is requiring employees to pay for parking or transit on their own.
CoaST Presentation on UBTI and Impact of Tax Reform on Tax-Exempt Transportation Fringe Benefits
CoaST 1-pager on Changes Made To Transportation Fringe Benefits
House Legislation:
Status: Pending in Ways & Means Committee (9/4/18)
Senate:
Status: Pending in Finance Committee (9/4/18)
CoaST Presentation on UBTI and Impact of Tax Reform on Tax-Exempt Transportation Fringe Benefits
