Internal Revenue Code Section 132(a)
Internal Revenue Code
Internal Revenue Code
The Internal Revenue Code is the domestic portion of Federal statutory tax law in the United States, published in various volumes of the United States Statutes at Large, and separately as Title 26 of the United States Code...

 Section 132(a)
provides eight types of fringe benefits that are excluded from gross income
Gross income
Gross income in United States tax law is receipts and gains from all sources less cost of goods sold. Gross income is the starting point for determining Federal and state income tax of individuals, corporations, estates and trusts, whether resident or nonresident."Except as otherwise provided" by...

. These include fringe benefits which qualify as a (1) no-additional-cost service, (2) qualified employee discount, (3) working condition
Occupational safety and health
Occupational safety and health is a cross-disciplinary area concerned with protecting the safety, health and welfare of people engaged in work or employment. The goal of all occupational safety and health programs is to foster a safe work environment...

 fringe, (4) de minimis
De minimis
De minimis is a Latin expression meaning about minimal things, normally in the locutions de minimis non curat praetor or de minimis non curat lex .In risk assessment it refers to a level of risk that is too small to be concerned with...

 fringe, (5) qualified transportation fringe
Employer Transportation Benefits in the United States
An employer may provide transportation benefits to their employees that are tax free up to a certain limit. Under the US Internal Revenue Code section 132, the qualified transportation benefits is one of the eight types of statutory employee benefits that are excluded from gross income...

, (6) qualified moving expense reimbursement, (7) qualified retirement planning services, or (8) qualified military base
Military base
A military base is a facility directly owned and operated by or for the military or one of its branches that shelters military equipment and personnel, and facilitates training and operations. In general, a military base provides accommodations for one or more units, but it may also be used as a...

 realignment and closure fringe.

Statutory fringe benefits

While Section 132 is not exhaustive with regard to statutory fringe benefit provisions within the Internal Revenue Code, it is the centerpiece. One of the most significant fringe benefits for employees, the qualified retirement plan, is governed under Section 401. Qualified Pension, Profit-Sharing
Profit sharing
Profit sharing, when used as a special term, refers to various incentive plans introduced by businesses that provide direct or indirect payments to employees that depend on company's profitability in addition to employees' regular salary and bonuses...

, and Stock Bonus Plans. Internal Revenue Code Subchapter D--Deferred Compensation, Etc., Part I--Pension, Profit-Sharing, Stock Bonus Plans, Etc. more fully covers these deferred compensation
Deferred compensation
Deferred compensation is an arrangement in which a portion of an employee's income is paid out at a date after which that income is actually earned. Examples of deferred compensation include pensions, retirement plans, and stock options...

 plans. In addition, Section 74(c) excludes "employee achievement awards" for length of service or safety achievements, Section 79 excludes group term life insurance benefits provided by an employer, and Section 106(a) excludes accident and health insurance
Health insurance
Health insurance is insurance against the risk of incurring medical expenses among individuals. By estimating the overall risk of health care expenses among a targeted group, an insurer can develop a routine finance structure, such as a monthly premium or payroll tax, to ensure that money is...

 coverage provided by an employer.

Eight fringe benefits excluded from gross income

Section 132(a)(1): No-Additional-Cost Service. A No-Additional-Cost Service is defined in Section 132(b) as any service provided by an employer to an employee if (1) the service is offered for sale to customers in the ordinary course of the employer's business and (2) the employer incurs no substantial additional cost in providing the service to the employee.

Section 132(a)(2): Qualified Employee Discount. A Qualified Employee Discount is defined in Section 132(c) as any employee discount with respect to qualified property or services to the extent the discount does not exceed (a) the gross profit
Gross profit
In accounting, gross profit or sales profit is the difference between revenue and the cost of making a product or providing a service, before deducting overhead, payroll, taxation, and interest payments...

percentage of the price at which the property is being offered by the employer to customers, in the case of property, or (b) 20% of the price offered for services by the employer to customers, in the case of services.

Section 132(a)(3): Working Condition Fringe. Working Condition Fringe is defined in Section 132(d) as any property or services provided to an employee to the extent that, if the employee paid for the property or services, the payment would be allowable as a deduction under Section 162 or 167.

Section 132(a)(4): De Minimis Fringe. De Minimis Fringe is defined in Section 132(e) as any property or service whose value is so small as to make accounting for it unreasonable or administratively impracticable.

Section 132(a)(5): Qualified Transportation Fringe. Qualified Transportation Fringe is defined in Section 132(f) as (1)(A) transportation in a commuter highway vehicle between the employee's residence and place of employment, (B) any transit pass, or (C) qualified parking, if provided by an employer to an employee. A bicycle commuter benefit will be available beginning in 2009.

Section 132(a)(6): Qualified Moving Expense Reimbursement. Qualified Moving Expense Reimbursement is defined in Section 132(g) as any amount received by an individual from an employer as payment for expenses that would be deductible as moving expenses under Section 217 if paid by the individual.

Section 132(a)(7): Qualified Retirement Planning Services. Qualified Retirement Planning Services is defined in Section 132(m) as retirement planning advice or information provided to an employee and spouse by an employer maintaining a qualified employer plan.

Section 132(a)(8): Qualified Military Base Realignment and Closure Fringe. Qualified Military Base Realignment and Closure Fringe is defined in Section 132(n) as one or more payments under Section 1013 of the Demonstration Cities and Metropolitan Development Act of 1966 to offset the adverse effects on housing values from military base realignment or closure.

Further information

For further information regarding the fringe benefits excluded from gross income under Section 132(a), see Section 132 in its entirety.
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