IRS Releases 2026 Publication 15-B

The Details

The Internal Revenue Service (IRS) has released the 2026 version of Publication 15-B (Employer's Tax Guide to Fringe Benefits), which contains information for employers on the employment tax treatment of various fringe benefits, including accident and health coverage, adoption assistance, company cars and other employer-provided vehicles, dependent care assistance, educational assistance, employee discount programs, group term life insurance, moving expense reimbursements, health savings accounts (HSAs), and transportation (commuting) benefits. (Publication 15-B uses the term "employment taxes" to refer to federal income tax withholding as well as social security and Medicare (FICA) and federal unemployment (FUTA) taxes.) Publication 15-B is a supplement to Publication 15 (circular E) and IRS Publication 15-A (Employer's Supplemental Tax Guide).  

A few of the highlights under “What’s New” in the 2026 version of Publication 15-B are as follows:

Cents-per-mile rule. The business mileage rate for 2026 is 72.5 cents per mile. You may use this rate to reimburse an employee for business use of a personal vehicle, and under certain conditions, you may use the rate under the cents-per-mile rule to value the personal use of a vehicle you provide to an employee.

Qualified parking exclusion and commuter transportation benefit. For 2026, the monthly exclusion for qualified parking is $340 and the monthly exclusion for commuter highway vehicle transportation and transit passes is $340. See Qualified Transportation Benefits in section 2. Contribution limit on a health flexible spending arrangement (FSA). For plan years beginning in 2026, a cafeteria plan may not allow an employee to request salary reduction contributions for a health FSA in excess of $3,400.

Moving expense reimbursement. P.L. 119-21, commonly known as the One Big Beautiful Bill Act, permanently eliminates the exclusion for qualified moving expense reimbursements from your employee's income. However, the exclusion is available in the case of a member of the U.S. Armed Forces on active duty who moves because of a permanent change of station due to a military order. The exclusion applies only to reimbursement of moving expenses that the member could deduct if they had paid or incurred them without reimbursement. See Moving Expenses in Pub. 3, Armed Forces’ Tax Guide for the definition of what constitutes a permanent change of station and to learn which moving expenses are deductible.

P.L. 119-21 also makes the exclusion available to an employee or new appointee of the intelligence community (as defined in section 3 of the National Security Act of 1947 (50 U.S.C. 3003)) (other than a member of the Armed Forces of the United States) who moves pursuant to a change in assignment which requires relocation. The exclusion applies only to reimbursement of moving expenses that an intelligence community employee or appointee could deduct if they had paid or incurred them without reimbursement.

Bicycle commuting reimbursements. P.L. 119-21 permanently eliminates the exclusion of qualified bicycle commuting reimbursements from your employee’s income for tax years beginning after 2025.

Withholding on supplemental wages. The withholding rate on supplemental wages remains 22% (37% if supplemental wages paid to an employee during the calendar year exceed $1 million) because P.L. 119-21 permanently extended the individual tax rates enacted in P.L. 115-97, Tax Cuts and Jobs Act.

Dependent care assistance exclusion from wages. For the 2026 tax year, the annual dependent care FSA limit was raised from $5,000 to $7,500 ($2,500 to $3,750 for married filing separately).

Employer’s meal deduction. For amounts incurred or paid after 2025, the employer can no longer deduct expenses associated with providing food and beverages to employees through an eating facility that meets the requirements for de minimis fringe benefits or for the convenience of the employer. The 50% deduction that applied through 2025 has been eliminated as part of a scheduled change in the 2017 Tax Cuts and Jobs Act.

Employer payments of student loans. P.L. 119-21 permanently extends the $5,250 exclusion from income for employer-provided educational assistance for payments made after 2025.

For a copy of IRS Publication 15-B “Employer's Tax Guide to Fringe Benefits” (for benefits provided in 2026), please click on the link provided below.

https://www.irs.gov/pub/irs-pdf/p15b.pdf