Major tax reform legislation passed last month carries important changes for employers, HR and payroll departments. Among them:

  • Employer-provided tuition assistance will remain tax-free. A provision to make the benefit count as taxable income for staff was scrapped in the final version.
  • Employers will now be able to get a tax credit for up to 25% for wages paid to qualifying employees who are out on FMLA leave, beginning in tax years after 2017.
  • The business tax deduction for qualified mass transit and parking benefits was eliminated. Those benefits will continue to be tax exempt to employees.
  • The Affordable Care Act’s “individual mandate” is effectively eliminated. The tax penalty on people forgoing health coverage was reduced to zero, taking effect in 2019. If healthy people leave the ACA exchanges, this may result in more cost-shifting onto employer health plans.
  • The ability of publicly held employers to deduct compensation paid to top executives will be reduced.

Source: HR Specialist, by Nancy Delogu, Esq., Littler Mendelson | December 2018