On December 7, 2021, the IRS provided an updated draft of the 2021 IRS Publication 15-B, the Employer's Tax Guide to Fringe Benefits. This publication provides an overview of the taxation of fringe benefits and applicable exclusion, valuation, withholding and reporting rules.

The IRS updates Publication 15-B each year to reflect any recent legislative and regulatory developments. Additionally, the revised version provides the applicable dollar limits for various benefits for the upcoming year. As standard procedure, the IRS releases a preliminary draft of the updated guide before the final publication.

Further, the IRS will also issue a new draft of the form to alert users of any changes made to the prior version. This publication was most recently updated to note that the American Rescue Plan Act (ARPA) increased the employer-provided dependent care exclusion to $10,500 ($5,250 for a married employee filing a separate return) for calendar year 2021.

As a reminder, the business mileage rate for 2021 is 56 cents per mile, which can be used to reimburse an employee for business use of a personal vehicle and, under certain conditions, to value the personal use of a vehicle provided to an employee. The 2021 monthly exclusion for qualified parking is $270, and the monthly exclusion for commuter highway vehicle transportation and transit passes is $270. For plan years beginning in 2021, the maximum salary reduction permitted for a health FSA under a cafeteria plan is $2,750.

Employers should be aware of the availability of the updated publication and most recent modifications.

Draft Publication 15-B »