HR Updates » Federal

Employer-provided Benefit Tax Breaks Extended by “Fiscal Cliff” Package

Monday, January 21, 2013 15:35

Federal tax relief legislation passed by Congress and signed into law by President Obama on January 1, 2013, included several provisions beneficial to the workforce.

Educational Assistance

The tax break for employer-provided education assistance under Section 127 of the Internal Revenue Code has been permanently extended. This provisions allows employees to exclude from taxable income up to $5,250 per year in employer-provided educational assistance for undergraduate and graduate level coursework.

Transportation Support

The increase for an exclusion for employer-provided transit and vanpool benefits through 2013 has been extended. The exclusion had been increased to $240 per month through 2012 but was scheduled to return to $125 at the beginning of 2013.

Child/Dependent Care

A $600 deduction in the $3,000 credit for child/dependent care that was set to take effect on January 1, 2013 has been reversed.

Unemployment Benefits

Federal emergency unemployment benefits have been extended for an additional year.

No extension of Payroll Tax Cut

On the other hand, the legislation did not include an extension of the two percent (2%) payroll tax cut that had been part of the economic stimulus package enacted in 2010.


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