IRS Announces 2013 Inflation Adjustments to Amounts Excludable as Transportation and Adoption Benefits

January 16, 2013

As indicated in our recent article, the American Taxpayer Relief Act of 2012 (the Act) extended various employee benefits provisions in the Internal Revenue Code, including income exclusions for qualified transportation fringe benefits and benefits provided under adoption assistance programs.  In Revenue Procedure 2013-15, the Internal Revenue Service announced 2013 inflation adjustments to the amounts permitted to be excluded for these benefits:

  • Qualified Transportation Fringe Benefits.  As explained in our recent article, to maintain so-called “transit parity” with employer-provided parking benefits, the Act retroactively increased the 2012 monthly excludable amount for employer-provided mass transit and vanpool benefits from $125 to $240.  The Act also extended the increased monthly exclusion through 2013.  As a result of the inflation adjustment, for 2013 the monthly excludable amount for either type of transportation benefit has been increased to $245.
  • Employer Adoption Assistance.  The Act permanently extended the employee exclusion for adoption expenses paid by an employer adoption assistance program.  In 2013, the aggregate amount that can be excluded on account of a special needs adoption has been increased to $12,970 as a result of the inflation adjustment.  For other adoptions, an employee may now exclude amounts paid by the employer on account of the adoption up to an increased maximum of $12,970, also as a result of the inflation adjustment.

For further information on these matters, please contact either of the authors, Steven Kittrell and Jessica Sackin, or any other members of McGuireWoods’ employee benefits team.