Under normal circumstances, amounts paid by an employer to an employee result in taxable income to the employee.

Let's say your tax rate is 25%.

In order to put $240 in your pocket, it costs your employer $320 ($240 / (1 - 25%)). Of that $320, $80 goes to the IRS, $240 goes to you.

This provision allows your employer to provide you with a $240 benefit. Since it is non-taxable, it only costs them $240.

This is similar to the tax provisions for employer sponsored health insurance.

Congress is trying use the tax code to incentivize employers to provide benefits that they deem "good" for society.