Wait, what? Yes, you have to read that carefully. Check out the complete explanation from our friends at WageWorks. This is a 2018 little-mentioned change as a result of the Tax Cuts and Job Act (HR 1).
The employee still receives an income tax deduction on the dollars they voluntary put aside for commute-related public transit and parking. And the employer does not have to pay FICA on those funds. But the employercannot also deduct those same wage dollars as a normal business expense.
WageWorks offers a clear example and deeper explanation here.
Our take: offering pre-tax commuter benefits is still a great (and often required) part of any employer benefit package. But the change will disproportionately affect smaller businesses, that are less likely to reap the full benefits of other business tax cuts that were part of HR 1.
