How HR Fared in the New Tax Reform Law



As many folks were winding down the year getting ready for the holidays, House and Senate Republicans were busy passing sweeping tax reform, sending the legislation to President Trump last week. He signed the bill, and with it, delivered several wins to HR, employers and employees. Those include:

  • Preservation of Employer-Provided Education Assistance (Internal Revenue Code (IRC) Section 127): Allows employees to exclude from income up to $5,250 of education assistance provided by their employer, at the undergraduate, graduate or certificate level, per year.
  • Preservation of Qualified Tuition Reduction Programs (IRC Section 117): Allows institutions of education to provide their employees, spouses and children educational assistance tax-free.
  • Preservation of Dependent Care Flexible Spending Accounts (IRC Section 129): Allows employees to contribute up to $5,000 per calendar year tax-free into an account utilized for child care spending.
  • Preservation of Adoption Benefits: Allows employees to exclude from income adoption assistance provided by their employer up to $13,500 (indexed for inflation).
  • Preservation of the Work Opportunity Tax Credit: Provides employers with a 40 percent tax credit for hiring individuals in certain targeted groups.
  • Preservation of Medical Savings Accounts (MSAs): Allows certain individuals to contribute to an MSA, which is a tax-exempt trust or custodial account.
  • Preservation of Catch-Up Provisions for High Earners: Allows individuals making more than $500,000 annually to make catch-up provisions to 401(k), 403(b) and 457 plans.

While the tax treatment of the provisions mentioned above won’t be changing – if your workplace currently offers moving, transit or biking benefits or meals and an onsite gym - be prepared - the tax treatment will be changing effective December 31, 2017. These benefits are no longer a deductible business expense for companies. While employees won’t pay tax on employer-provided meals, gyms or transit benefits, they will have to include moving benefits and biking subsidies in their taxable income.

Sound like a lot to digest? Check out SHRM’s comparison chart or HRNews Article that details all relevant provisions.




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