Recent legislation has amended Mass. Gen. Laws Ch. 62 § 1(c) to conform to Internal Revenue Code (IRC) Section 132(f) for taxable years beginning on or after Jan. 1, 2022. Consequently, Massachusetts has adopted the federal monthly exclusion amounts for employer-provided parking, transit pass and commuter highway vehicle transportation benefits for the 2022 tax year and beyond.
The Details:
Massachusetts Conformity with Federal Law
As announced in Technical Release Number 22-13 (TR 22-13), Massachusetts recently amended its law so that for personal income tax purposes, Massachusetts now follows the provisions of the IRC for taxable years beginning on or after January 1, 2022.
Therefore, for the 2022 tax year, the Massachusetts monthly exclusion amounts are $280 for employer-provided parking and $280 for combined transit pass and commuter highway vehicle transportation benefits.
Massachusetts 2023 Limits:
On December 6, 2022, Massachusetts released TR 22-15 which states the following:
Due to the change in law, for taxable years beginning on or after January 1, 2022, Massachusetts conforms to IRC § 132(f) as amended and in effect on January 1, 2022. Accordingly, the Massachusetts maximum monthly exclusion amounts for taxable years beginning in 2023 are the same as the federal exclusion amounts: $300 for employer-provided parking and $300 for combined transit pass and commuter highway vehicle transportation benefits.
Next Steps:
Employers should discuss the retroactive effective date of the Massachusetts limits and make the necessary adjustments to employee’s taxable income where warranted. Also, for 2023, Massachusetts employees may elect for state and federal income tax purposes the federal exclusion of $300 for both transit and parking benefits.
Have Questions?
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