On December 14, 2017, the Internal Revenue Service released the 2018 standard mileage rates used to calculate deductible costs of operating vehicles for business purposes. The rate increased by one cent from 53.5 cents in 2017 to 54.5 cents in 2018. Employers who adopt the IRS standard mileage reimbursement rate in their employee handbook or other employment policy will need to update their reimbursement practices to reflect this change.
Additionally, as we previously reported, the tax plan signed into law by President Trump on December 22, 2017 impacts qualified transportation benefits (also known as commuter benefits). In the past, employers could deduct the amount they provide toward an employee’s qualified parking, transit passes, or vanpool expenses up to certain federal limits ($255 in 2017 and $260 in 2018) as a business expense. However, under the new tax law, employers can no longer deduct this expense beginning in 2018. Moreover, while employees can continue to exclude qualified parking and transit benefits from their income, qualified bicycle commuting expenses will no longer be excludable.
The tax law requires the Secretary of Treasury to issue regulations or other guidance as necessary to implement these changes; however, the law goes into effect for all amounts paid or incurred after December 31, 2017. Employers who have already budgeted for 2018 may need to review their assumptions to measure the impact of these taxable expenses.
Employers should consult tax or legal professionals to determine the best options for handling parking and other commuter policies should they want to change existing policies.
Originally Published By ThinkHR.com