Our Take on Decoupling Federal and State Law on Commuter Benefits – We Still Need Your Help!

June 6, 2018 - NPCC is part of a coalition that is advocating with New York State to reform our state tax law and reduce the cost to nonprofits by decoupling the federal and state law, therefore keeping New York from charging the 9% tax on these benefits. Recent legislation was introduced into the New York State Senate, and NPCC and some of the coalition members wrote a memo in support.

For background, as a result of the new federal tax law, nonprofit employers must now pay Unrelated Business Income Tax (UBIT) on commuter benefits, including Metrocards and employee parking. New York law imposes a state UBIT whenever federal law does. As a result, New York will automatically follow the new federal statute, imposing an additional 9% tax. If the employer subsidizes the maximum allowable benefit of $260/month, it will owe state tax of $280 for each employee each year. For an organization of 40 employees, that totals more than $11,000 per year. With more than 1.3 million nonprofit employees statewide3, the tax could divert millions of dollars from the nonprofit sector each year. For more information, see this FAQ.

Please call your legislators to tell them to support this bill.