Originally Posted by
mtb123
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.
Oh yeah, because employers are alwys looking for ways to pay their employees more instead of getting them to work more for less, yeah.
Last time I had an offer of employment they never once gave me a number they would pay me and then tell me they were actually paying 25% more so I wont have to pay that amount in taxes.
Employers don't give a **** about how much tax employees have to pay, they only care about how much they have to pay out, and how to keep that to the absolute minimum.