There was a lot of debate regarding certain Employee Benefits, which we noted in last month’s newsletter. These changes are effective 1/1/2018 unless otherwise noted. Here’s where the final bill came down:
- Individual Mandate: The mandate, which helps to stabilize the individual market, but is unpopular with those who don’t want coverage, will be repealed effective 1/1/2019.
- Moving Reimbursements: Neither employers or employees will be allowed to deduct the cost of relocating an employee, during the tax years 2018 through 2025.
- Education Benefits: Employers may continue to provide up to $5,250 in tax free educational benefits to employees, which were originally on the chopping block with the House bill. In related news, the ability to deduct student loan debt and receive a graduate school tuition waiver tax free will remain intact.
- Dependent Care Assistance Programs (DCAP): While the House bill proposed to eliminate the $5,000 a year that families can set aide pre-tax to help with dependent care expenses, the final bill makes no changes to DCAPs.
- Paid Leave Tax Credit: The Senate version included a tax credit for employers who replace at least 50% of compensation for employees out on Family and Medical Leave, and this provision made it through to the final bill. It is unclear whether employers who provide short term disability benefits will also qualify, or only those providing salary continuation.
- Employer-paid commuting benefits: Employers who pay for parking or public transportation for their employees may no longer deduct the costs. Qualified bicycle commuting expenses will no longer be tax exempt for employees. Employees can still set aside their own money pre-tax. Read more here.
- Adoption Assistance: Employers may continue to provide tax-favored assistance to employees to assist with adoption.
- Employee Achievement Awards: Employers who grant service awards to employees upon anniversary and/or retirement will face much stricter limits of what may now be deducted as a business expense.
- Stricter Meals and Entertainment Definitions: Employee meals and snacks provided for the convenience of the employer will now only be 50% deductible, until 2025 when the deduction is eliminated.
- Executive Pay: There are significant changes in the final bill regarding rules on Executive Compensation, which are outside the scope of our expertise. Please contact your legal counsel or a qualified compensation consultant for more details on this topic.
Please note these are all just general summaries of provisions of the tax bill and are not intended as tax advice. Please consult your tax counsel for specific details applicable to your organization.
For a more general recap of how this new law will affect you or your business, check out this story from Reuters or this one from the New York Times.
And, as always, please don’t hesitate to contact us with any questions! Please note, this article was updated once the President signed the bill into law.
