New Tax Law Repeals Individual Mandate, Eliminates Tax Breaks for Several Fringe Benefits
President Trump has signed into law the Tax Cuts and Jobs Act, which, among other things, effectively repeals the Affordable Care Act’s individual mandate beginning in 2019, eliminates tax breaks for several fringe benefits, and creates a new tax credit for employers offering paid family and medical leave.
Individual Mandate Repeal Effective in 2019
Under the Affordable Care Act, individuals are currently required to have minimum essential health coverage, qualify for an exemption from the requirement, or pay a penalty tax. This ACA provision is known as the “individual mandate.” Effective in 2019, the individual mandate is effectively repealed, as the penalty tax for noncompliance with the mandate will be reduced to $0.
Tax Breaks for Several Fringe Benefits Eliminated
Effective in 2018, the tax treatment of certain fringe benefits will be impacted as follows:
- Employer contributions to an employee’s qualified transportation fringe benefits (including those for employees’ transit passes and parking) will no longer be deductible from the employer’s gross income.
- Qualified moving expense reimbursements made by an employer will generally no longer be excludable from an employee’s gross income.
- Qualified bicycle commuting reimbursements made by an employer will no longer be excludable from an employee’s gross income.
New Employer Tax Credit for Paid Family and Medical Leave
For tax years 2018 and 2019, employers that offer paid family and medical leave (as defined under the federal Family and Medical Leave Act [FMLA]) to employees may qualify for a newly established tax credit of up to 25% of the annual wages paid to those employees.
For a complete overview of the changes in the tax law, click here.
New York State Minimum Wage
Beginning 12/31/2017, the state minimum wage has increased to $10.40 and hour. Please see the table below for a breakdown of the different counties in NY:
|NYC – Large Employers (11 or more)||$13.00||$15.00|
|NYC – Small Employers (10 or less)||$12.00||$12.50||$15.00|
|Long Island & Westchester||$11.00||$12.00||$13.00||$14.00||$15.00|
|Remainder of New York State||$10.40||$11.10||$11.80||$12.50||$15.00*|
*Annual increases for the rest of the state will continue until the rate reaches $15 minimum wage (and $10 tipped wage). Starting 2021, the annual increases will be published by the Commissioner of Labot on or before October 1. They will be based on percentage increases determined by the Director of the Division of Budget, based on economic indices, including the consumer price index.
New York Paid Family Leave
New York’s mandated Paid Family Leave goes into effect January 1st. Here is the latest information regarding the new law:
The following resources (among others) are now available:
- Model Language for Employee Materials: Employers are required to inform their employees about their PFL rights, either in an employee handbook or other written materials. The Model Language for Employee Materials document provides compliant language employers can use and customize based on their PFL policies and procedures. The document also lists topics that employee materials should include.
- Note: These materials are not offered as legal advice. It is strongly advised that employers have their company attorneys review the drafts before employee distribution.
- Statement of Rights for Paid Family Leave: Employers must provide the Statement of Rights for Paid Family Leave to employees when they take PFL or take time off from work for a PFL-qualifying event, but have not requested PFL. Employers may also provide this form to all employees to educate them about PFL.
Below are some older articles that we published on the subject:
Or you can download our free guide below:
The IRS has extended the due dates for furnishing 2017 Forms 1095-B and 1095-C to covered individuals and full-time employees, respectively, from January 31, 2018, to March 2, 2018. The IRS has also extended good faith penalty relief to reporting entities who make certain calendar year 2017 information reporting errors. However, the deadline to file 2017 Forms 1095-B and 1095-C with the IRS remains February 28, 2018 (or April 2, 2018, if filing electronically).
Penalty Relief Extension
The IRS has extended penalty relief to reporting entities that can show that they made good faith efforts to comply with the calendar year 2017 information reporting requirements (both for furnishing to individuals and for filing with the IRS). This relief applies to missing and inaccurate taxpayer identification numbers and dates of birth, as well as other information required on the return or statement.
Applicable large employers (over 50 Full-time eligible employees) must use Form 1095-C to report information to their full-time employees about the health care coverage they have offered in a calendar year. Alternatively, Form 1095-B is used by insurers, self-insuring employers, and other parties that provide minimum essential health coverage to report information on this coverage to covered individuals. Employers subject to both reporting provisions (generally self-insured employers with 50 or more full-time employees, including full-time equivalent employees) will satisfy their reporting obligations using Form 1095-C.
Click here for more information from the IRS.
More updates to follow!
2018 FICA Limits | 2018 Health Account Limits | 2018 Retirement Account Limits